Progress Report: The Medicare Savings Mirage

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Center for American Progress - Progress Report

 

by David Sirota, Christy Harvey, Judd Legum and

Jonathan Baskin

 

 

July 2, 2004

PRESCRIPTION DRUGS The Medicare Savings Mirage

AFGHANISTAN The Other Quagmire

UNDER THE RADAR

 

Note: There will be no Progress Report on Monday, July 5.

 

PRESCRIPTION DRUGS

The Medicare Savings Mirage

 

So much for all that talk about the president's new

Medicare bill making health care more affordable. A

new study commissioned by the AARP shows price

increases have " negated much of the savings promised

to Medicare beneficiaries, " because drug manufacturers

" are offsetting discounts with prices that are higher

than they otherwise would have been. "

 

According to the study, drug companies " increased their prices for

prescription drugs by three times the general rate of

inflation last year - a trend that has continued since

President Bush signed legislation adding drug coverage

to Medicare. " Pfizer Inc., Bristol-Myers Squibb Co.

and other drugmakers " raised prices in the first

quarter [of 2004] almost seven times as fast as

producers of all U.S. goods. " The worst part? The

price hikes come following a year in which U.S.

prescription-drug sales grew 11.5 percent, including

average profit margins upward of 14 percent, among the

highest of any U.S. industry.

 

The Bush Medicare bill, which allows HMOs to

" raise or lower discounts on a

weekly basis, " promises to make this a continuing

problem for the nation's beneficiaries.

 

(You get what you pay for: follow the money trail

with the American Progress backgrounder " Paying to Play:

Health Care Companies, Campaign Contributions

and Medicare Drug Discount Card. " )

 

PROFITS AT EXPENSE OF PATIENTS: Besides raising

prices, Time Magazine reports on another way one of

America's most profitable industries is maximizing

profits and endangering patients.

 

" Two recent cases involving off-label sales of prescription drugs,

Neurontin and Paxil, are rekindling debate about

whether drugmakers are generating profits at the

expense and health of consumers. "

 

The New York Times reports that pharmaceutical companies are using a

" shadowy system of financial lures... to persuade

physicians to favor their drugs. " Federal prosecutors

are now investigating " whether drug companies are

persuading doctors (link#8211); often through payoffs (link#8211);

to prescribe drugs that patients do not need or should

not use or for which there may be cheaper

alternatives. "

 

PROFITS AT THE EXPENSE OF PATIENTS, PART 2: A new

study shows pharmaceutical price gauging has a real

effect on America's seniors.

 

The study, published Friday in Medical Care,

shows " Senior citizens who did

not follow their prescribed drug regimens because they

could not cover the costs were 76% more likely in the

long run to have an overall 'major decline in health'

than elderly patients who followed their doctors'

orders. "

 

Lead author Dr. Michele Heisler said, " A lot

of critics are saying it's too expensive to provide or

improve drug coverage, but studies like this show that

the downstream costs from adverse health outcomes

later may be more expensive. "

 

THE R & D MYTH: Senior Harvard lecturer Marcia Angell

deconstructs the research and development (R & D) myth

in this month's New York Review of Books.

 

Drug companies generally justify their high profit margins

by touting the money they spend on new drugs for

patients, but according to Angell, " The prices drug

companies charge have little relationship to the costs

of making the drugs and could be cut dramatically

without coming anywhere close to threatening R & D. "

 

She points out that for America's top ten pharmaceutical

companies, R & D amounted to only 14 percent of sales in

2000, far less the 36 percent which went towards

" something usually called 'marketing and

administration.' "

 

And she claims most drug companies

no longer rely on their own research for new drugs

anyway, mostly leaching from academia, small biotech

startup companies, and the National Institutes of

Health (NIH).

 

Far from an " engine of innovation, " the

pharmaceutical industry is a " vast marketing machine.

Instead of being a free market success story, it lives

off government-funded research and monopoly rights. "

 

AFGHANISTAN

The Other Quagmire

 

Yesterday, Vice President Dick Cheney claimed,

" America is safer, and the world is more secure,

because Iraq and Afghanistan are now partners in the

struggle against terror, instead of sanctuaries for

terrorist networks. "

 

Setting Iraq aside, the war in

Afghanistan, is far from won. This administration

diverted precious resources from the war in

Afghanistan to the voluntary war in Iraq.

 

As a result, al Qaeda and the Taliban both remain strong, dangerous

forces, the country is entrenched in ongoing violence,

and there is still a long, hard slog to a new,

democratic Afghanistan. (American Progress's Robert

Boorstin examines President Bush's penchant for

ceremony over substance in the war in Afghanistan.)

 

TALIBAN ON THE REBOUND: Reuters reports, " Taliban

guerrillas kidnapped and killed 16 people in an Afghan

province after finding them with voter registration

cards for the country's September elections, officials

said Sunday. "

 

The latest attacks are a reminder of the

need for more international troops, especially in the

run-up to the election and represent " further setbacks

for U.S.-led efforts to bring peace to Afghanistan, a

country President Bush has described as a role model

for Iraq. "

 

The Taliban also took credit this week for

slitting the throat of a cleric for promoting

Christianity. Last November, the president prematurely

proclaimed we had " put the Taliban out of business

forever. "

 

AL QAEDA BACK IN TRAINING: A video has surfaced which

may show an al Qaeda training camp currently running

in either Afghanistan or near the Pakistani border.

 

The New York Times reports, this could be " the first

evidence that al Qaeda ha regrouped sufficiently to

carry out training operations inside Afghanistan or

Pakistan since the United States toppled the Taliban

in 2001. "

THE IRAQ DRAIN: The war in Iraq drained critical

resources and attention from the ongoing war in

Afghanistan. A report by the International Institute

for Strategic Studies, a paper published by the Army

War College and a new book by a CIA terror expert all

concur that, instead of aiding the fight against

terrorism, the war in Iraq instead helped al Qaeda.

This claim is backed up by revised data in the latest

report on terrorism by the State Department, which

shows terrorist attacks last year were at a 20-year

high.

The public is beginning to absorb this; a new

CNN/Gallup/USA Today poll found 55% of those Americans

surveyed now say that the war has increased U.S.

vulnerability to terrorism.

ELECTION DAY POSTPONED: For a second time,

Afghanistan's national elections will have to be

delayed, top foreign and Afghani officials said

yesterday.

Problems: Sustained insecurity and violence

in the country mean only about 5.5 million of the 10

million eligible voters have been registered. The

violence also means the government census office has

been unable to determine " vital population estimates

used to decide the distribution of seats in

Parliament. " And according to the U.N. representative

in Kabul, money is also a factor; Afghanistan is

facing a $60 million shortfall in the funds needed for

presidential and parliamentary elections.

SEARCHING FOR NATO: Ongoing insecurity in Afghanistan

remains a crucial problem.

Afghan president Hamid Karzai, pleaded

with NATO last month to " accelerate

deployment of troops to his country to boost security

during September's elections, " saying, " I would like

you to please help. Come sooner than September. "

Today's Financial Times reports, however, that NATO is

planning to send " far fewer [troops] than

[Afghanistan] actually needs. " The White House is to

blame for some of this reluctance to help.

Mark Schneider, senior vice president of the International

Crisis Group, says " that while the Bush Administration

now backs " the expansion of NATO forces in

Afghanistan, " residual displeasure among NATO states

over U.S. action in Iraq has made getting action more

difficult. "

ECONOMY #8211; BUSINESS LEADER SCOLDS THE UNEMPLOYED:

According to government statistics, 250,000 American

jobs were sent overseas last year. What does the head

of the U.S. Chamber of Commerce, Thomas Donohue, have

to say about it? The newly unemployed should " stop

whining. " Donohue " is promoting overseas outsourcing

of jobs as a way to boost the economy. "

EMPLOYMENT #8211; THE JUNE SLUMP: Reuters reports this

morning, " The pace of U.S. hiring slumped sharply in

June. " Employers " added fewer than half the number of

payroll jobs forecast and hours of work shrunk. " The

numbers: " Only 112,000 jobs were created last month,

far fewer than the 250,000 that Wall Street analysts

had anticipated. April and May new-job totals were

revised down, to 324,000 and 235,000 respectively,

from 346,000 and 248,000. " Also, " in a sign of broader

weakness, the average workweek eased to 33.6 hours in

June from 33.8 in May, the shortest since a matching

33.6 hours in December. "

IRAQ #8211; FRUSTRATING THE INVESTIGATION: The

Financial Times reports, " The Pentagon's failure to

co-operate fully with the congressional probe into the

Abu Ghraib scandal is frustrating the investigation. "

Sen. John Warner (R-VA), expressing dissatisfaction

with Pentagon compliance, charged, " Congress must be

given the tools, the reports with which to do its

proper oversight. " One crucial missing piece of

evidence: the Pentagon has not given " Congress copies

of the International Committee of the Red Cross (ICRC)

reports related to Iraq - despite assurances from

Donald Rumsfeld, the defense secretary, two months ago

that it would do so. " (The Pentagon has claimed

collecting the report from commanders in the field

during a war is complicated.

When asked why the

Pentagon had not simply asked the ICRC to provide

Congress with the reports directly, Pentagon

spokesperson Larry Di Rita replied: " I'll mark that

down - I appreciate being educated. " ) A new report by

the Army which will be released in the next few weeks

will reportedly " paint a sobering picture of

conditions, policies and practices that left the Army

ill prepared to hold and question thousands of Iraqi

detainees at Abu Ghraib. "

TERRORISM #8211; CHENEY F**** WITH THE FACTS: Vice

President Dick Cheney insists on pushing the

discredited notion that Iraq and al-Qaeda had " long

established ties " before the U.S. invasion in March

2003.

To bolster his case Cheney keeps revealing new

" facts. " Yesterday, Cheney said " In the early 1990s,

Saddam had sent a brigadier general in the Iraqi

intelligence service to Sudan to train al Qaeda in

bombmaking and document forgery. " But when asked about

Cheney's newest assertion yesterday, senior

intelligence officials said " they had no knowledge of

this. "

A spokesman for the non-partisan 9/11

Commission said the commission has seen all the

information the vice president has seen, and stands by

the staff statement released at the last hearing,

which concluded that Iraq and al-Qaeda did not have a

" collaborative relationship. "

IRAQ #8211; THE INSURGENCY HYDRA: The New York Times

reports, a senior official of the American-led

occupation authority yesterday admitted that, " more

than a year of intensive efforts by the American

military and the Central Intelligence Agency to

destroy the insurgency in Iraq has failed to reduce

the number of 'hard-core Saddamists' seeking to

destroy the interim Iraqi government. "

No matter how many are killed or captured, the number of insurgents

in Iraq stays constant at " 4,000 to 5,000, suggesting

that as soon as they are killed or captured, they have

been replaced. " The New York Times points out, these

assessments have " sounded a very different note from

the optimistic-sounding messages that President Bush

has been sending all week about the prospects of the

new Iraqi government. "

AIDS #8211; THE GENERIC PROOF: The New York Times

reports important news in the global fight against

AIDS this morning: " The first clinical trial of

generic AIDS drugs in a simple 3-in-1 pill has found

that they work as well as brand-name drugs,

researchers are reporting today. "

The generic drugs are markedly cheaper and easier to use than their

brand-name counterparts. Why this is important: In a

stance that has angered much of the rest of the world,

President Bush thus far " has refused to let the $15

billion that [he] has committed to fighting AIDS in

the third world be used for generic drugs, arguing

that there is not enough proof they are effective. "

#160;Don't Miss

DAILY TALKING POINTS: How Safe Do You Feel This July

4th Weekend?

COLUMN: Working mothers caught in a bind.

CARTOON: How are we spending our retirement?

SUDAN: In attempt to cover up crisis, Sudanese

government secretly empties refugee camp the night

before a visit from U.N. Secretary General Kofi Annan.

MEDIA: Paul Krugman's must-read editorial about the

" essential truths " in Fahrenheit 9/11

SCIENCE: White House demands that all appointments to

World Health Organization are cleared by them first.

Critics fear White House will " blackball any

scientists who don't toe the administration line on

controversial health issues. "

Contact The Progress Report:

pr.

#160;Daily Grill

" Fifteen percent on brand-name drugs, minimum. "

- President Bush on the saving provided to seniors by

new Medicare prescription drug cards, 6/14/04

VERSUS

" Under the Administration's plan...there is no

guaranteed discount for Medicare beneficiaries. The

amount of the discount will vary from drug to drug and

from plan to plan. There is nothing that requires any

specific drug to be discounted. "

- Families USA

#160;Daily Outrage

Although 250,000 American jobs were sent overseas last

year, U.S. Chamber of Commerce, Thomas Donohue says

the newly unemployed should " stop whining. "

#160;Archives

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