I suffer from a harsh case of gout that requires constant treatment. Suddenly this year, I discovered that the generic drug I was using that cost about 3 cents a pill had been banned and replaced by a proprietary drug – a brand name – that cost $5 a pill. Welcome to America’s broken health-care system.
The United States pays about twice as much more per person for health care as other industrialized nations that provide their citizens more-comprehensive coverage and deliver better outcomes. This is the result of a system that wastes hundreds of billions of dollars on administrative costs, unneeded treatments and exorbitant pricing systems.
Prescription drugs are a classic example. U.S. taxpayers provide $25 billion a year for health-related research and development, much of it related to new drugs.
Prescription-drug companies frequently take the breakthroughs developed on the taxpayers’ tab, add a little custom design, then patent the drug. This enables them to charge exorbitant sums for pills that actually cost little to make. Their biggest expense is marketing. But billions are spent each year in wooing doctors and hospitals to adopt their brands.
Government could use its buying power to negotiate lower prices on prescription drugs. The VA does so with immense savings. Other nations do. Yet, the U.S. pays far higher prices for the drugs than other industrial nations, even though U.S. taxpayers often have paid to invent the drugs.
How could this be? When Bush joined with the Republican Congress to pass the prescription drug bill, the drug company lobby went to work. Then-Rep. Billy Tauzin (R-La.) chaired the key committee and wrote into the bill an extraordinary provision prohibiting Medicare from negotiating bulk discounts on drugs.
After the bill passed, Tauzin retired from Congress to take a job as the head of PhRMA, the drug company lobby, with a salary of $2 million a year.
Tauzin’s is an egregious case, but, as former House Speaker Newt Gingrich has demonstrated, far from unique. After retiring from Congress, Gingrich opened himself up for business in Washington, pocketing among other things, $1.6 million from Freddie Mac. Although Gingrich claimed he was hired as a “historian,” Freddie Mac sources said his influence was purchased to gain conservative support for Freddie’s “public-private” model. Gingrich publicly touted the mission and model, even as Freddie Mac was plunging into an already collapsing subprime mortgage market. But Gingrich pocketed as much from the health-care industry as he did from Freddie Mac.
The power of the health-care lobby makes our health-care system the most costly in the world. Now, these costs are becoming unaffordable. If they continue at this rate, health care will bankrupt everything – federal and state governments, private businesses, and families. Already, health-care emergencies are the leading cause of personal bankruptcy.
Obama’s health-care reform contains several measures that could save money. But to overcome the health-care lobbies, compromises were made and deals were cut. Thus, the indefensible prohibition on Medicare negotiating bulk-drug discounts was sustained. This reality is part of what gives the Occupy Wall Street demonstrations their force. We have major challenges we must face as a country – global warming and moving to renewable energy; affordable health care; curbing financial speculation; reviving manufacturing; and changing our corporate trade policies. In every case, the needed changes meet entrenched lobbies and our corrupted big-money politics.