The Treatment

Pharma's Win, Your Loss

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Will legislation that expands health insurance coverage also bring down the cost of medical care? That question has been driving the political conversation over reform in the last few days, as much as at an time before. And I'll have more to say on it shortly. For now, though, I wanted to note the intersection with another storyline: The influence of lobbyists who represent the health care industry.

Over the weekend, in a terrific piece of reporting, Robert Pear of the New York Times got a hold of an e-mail that went out from a lobbyist representing the biotech giant Genentech to members of Congress. The e-mail urged that members read statements into the record, hyping the importance of biotech to the nation's economy. Forty-two House members, split almost equally between the parties, did just that, sometimes lifting the words precisely.

The words didn't actually affect the outcome of legislation. But they are emblematic of the type of power that the drug industry--and, more generally, various stakeholders in the health care business--wield. And that power comes at the expense of the public interest. 

If we want to spend less money on medical care, that will, by definition, mean putting less money into the pockets of the people and companies that provide or produce it. Either we have to buy less care, pay less for the care that we buy, or some combination of the two--which is, more or less, what health care reform seeks to do.

For reasons that are as understandable as they are predictable, the people and companies that provide medical care don't find this idea particularly appealing. They fight these efforts and, all too frequently, they win. The drug industry struck a deal in which it supposedly agreed to give up $80 billion in revenue--a pittance, by any measure, considering that most experts would argue they're not giving up anything. Lobbyists for other groups in the health care business--hospitals, doctors, device makers--have won concessions of their own. There's overwhelming evidence that all of these groups could relinquish more money without harming patients; indeed, many cost-cutting efforts would actually yield to better medical care. But the lobbyists are powerful. Every dollar they save for their clients is another dollar in health care spending not saved.

To be sure, reformers have won some fights. It seems likely, for example, that insurance companies will have to give up some or all of the government subsidies that go into the Medicare Advantage program--subsidies that non-partisan government agencies have repeatedly found unjustified. Other sectors--including the hospitals and, yes, the drug industry--are being told to expect changes that will force them to focus more on cost-effective care. (My article in the new print edition, available soon online, explains why.)

Still, there's more that can and should be done. As legislation moves through the Senate and then, hopefully, to conference committee, there will be opportunities to push the health care industry even farther. The House bill, for example, seeks to save more money on drug purchases than the Senate bill likely will. Ideally, the House version will prevail.

And if it doesn't, there will be opportunities to revisit legislation after it passes. It happened that way with Medicare. Years after the program's creation, lawmakers, concerned over its costs, introduced a pair of sweeping changes to the way it pays hospitals and then doctors. Although lobbyists representing both groups had long resisted such changes, eventually the political pressure for cost control became too great. The lobbyists usually win. But not always.

 

Related Links:

"How To Build a Leaner, Meaner Lobbying Machine," by Suzy Khimm

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