September 16, 2009, 12:51 pm
Baucus Plan Pleases Drug Makers, but Not Other Groups
By Duff Wilson
Earlier this year, after the Senate Finance Committee and the White House asked health industry groups to make concessions to help pay for a health care overhaul, only two groups ultimately came through. One, the drug industry, offered $80 billion over 10 years, while the other, hospitals, offered $155 billion.
For drug makers, the proposal unveiled Wednesday by the Finance Committee chairman, Max Baucus, Democrat of Montana, met their expectations and promises to send millions of new customers their way.
Other big industries that never struck a deal are not so happy.
The Baucus plan would impose new fees on various health sectors starting next year, to help pay for covering the uninsured. The measures include $6 billion a year on health insurance providers, $4 billion on medical device makers and $750 million on clinical laboratories. The proposal’s $2.3 billion annual tax on the pharmaceutical industry was something the drug makers had already agreed to.
The various industry fees are to be imposed on the basis of companies’ market shares, and would continue for at least 10 years, for a total of $130.5 billion over the decade. The new fees were outlined in a framework plan Mr. Baucus gave to other senators last week.
Wednesday’s official release has kicked off a new round of protest by unhappy industries.
The medical device industry, whose main suggestion had been to impose fees on other industries, has enlisted lobbying heavyweights including the U.S. Chamber of Commerce.
Both senators from Minnesota, home of the medical device giant Medtronic, and from Indiana, where many medical technology companies are based, sent a letter to Mr. Baucus on Tuesday saying that the fees on medical devices would threaten jobs and innovation. Three of the senators, Amy Klobuchar and Al Franken of Minnesota and Evan Bayh of Indiana, are Democrats. The fourth, Richard G. Lugar of Indiana, is a Republican.
The lab-test companies are not happy, either. Alan Mertz, president of the American Clinical Laboratory Association, a trade group, wrote on its Web site that the fee on labs “translates into a disproportionate cut for laboratories, will damage efforts to enhance prevention and wellness, and raise health care costs.”
And as for insurers, the new fee would total about 25 percent of their pretax profits. But insurance executives like Ronald Williams, chief executive of Aetna, have indicated they might ultimately just pass the new fees on to their customers.
Analysts for Barclays Capital wrote in a report Friday for Wall Street investors that “insurers continue to be singled out as the villains of the debate.”
The drug makers also got what they wanted from Mr. Baucus in guarantees against direct price negotiation by the government over the cost of drugs in Medicare. The Baucus bill is silent on a House proposal to wring rebates from the pharmaceuticals industry for the higher cost of drugs sold to people who qualify for both Medicaid and Medicare since 2006.
Finally, the longstanding Democratic proposals to allow the reimportation of cheaper drugs from Canada is nowhere to be found in the Baucus bill.
So, under the Baucus proposal, here is what the industry has agreed to:
*Accept a total of $23 billion in new fees over 10 years
*Provide drugs at half price in a Medicare coverage gap known as the doughnut hole
*Increase Medicaid rebates to 23.1 percent for patented drugs (up from 15.1 percent now) and 13 percent for generic drugs (up from 11 percent).
*Support a new regulatory pathway for approving generic equivalents of biological drugs — the often expensive products from the biotechnology industry, including many cancer drugs, that so far have been generally exempted from generic competition.
And now, while insurers, device makers and labs step up their lobbying against the Baucus proposal, the drug industry is expected soon to roll out a new TV ad campaign to support it.
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Disgusting.
This is such a disgrace IMHO.
240 - under the democrats you are guaranteed now to pay $10,000 for those stitches.
