Financial Realities Affect Political Support for Health Care Reform

It is certainly not a surprise to anyone that the influence of lobbyists on many pieces of legislation is significant, pervasive, and effective in achieving specific goals of parochial interest groups. One can guess as to the influence the contributions have on many aspect of what extends into laws affecting many aspects of our lives. The effects (of perhaps funding shifts to other items) on health care, health care systems, health insurance programs, health professions, health professionals, and health professional educational programs are blatant and oppressive because of neglect of other worthy funding points. National Institutes of Health (NIH) funding for research, significant amounts of which can and has funded research conducted by faculty members within our academy in our schools and colleges of pharmacy, has remained virtually stagnant since 2003.1 Other research funding has been neglected as well. How can worthy funding options, ever so important to our colleagues, compete with the entrenched special interest groups significantly impacting how money is spent in the United States? State legislative funding for public schools and colleges also entails examining competing options supported by lobbying entities with far deeper pockets that any public university can ever hope to muster. Our publically funded higher education institutions are expressly prohibited from political contribution schemes, as they well should be. Meanwhile, funding for higher education supported by state legislatures has at best remained stagnant or has been significantly reduced presently and in the recent and not so recent past. Follow the Money The passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) is a case in point of how funding follows lobbyists’ collective activities. The Medicare Part D Drug Program as a part of this legislation overtly favored pharmaceutical manufacturers, insurers, and pharmacy benefit management companies in an egregious fashion. Pharmaceutical companies were and are allowed to do business as usual with multiple pricing levels, and they retain the ability to raise prices at will. The MMA legislation specifically prohibits the Centers for Medicare and Medicaid Services (CMS) from negotiating with pharmaceutical companies for advantageous prices that these same companies provide freely elsewhere. The Federal Supply Schedule (FSS) pricing has allowed the Veterans Health Administration (VA) to purchase drugs at reduced prices and the federal 340B Drug Pricing Program provides access to reduced price prescription drugs to over 12, 000 health care facilities certified in the United States. Pharmaceutical companies remain profitable even with these reduced pricing programs partly due to their ability to shift price hikes elsewhere in a multi-layered process of drug pricing. The current health care reform proposal that has passed in the US Senate contains no requirement for governmental negotiation for prescription drugs within Medicare Part D. The House of Representatives bill does contain a requirement for direct price negotiation between the Secretary of Health and Human Services and pharmaceutical companies. This among other differences will be hammered out in the Senate and House joint negotiations in committee. To provide for optimum participation by Medicare Part D prescription drug plans (PDPs) and Medicare Advantage (MA-PDPs, as a component of managed care Medicare Part C) drug plans, incentive were a component of the MMA legislation which provided PDPs and MA-PDPs significant subsidies containing upfront funding to allow for these companies to participate with an assurance of profitability.2 In effect, participating plans were given a profitability fallback regardless of what happened with enrollment into their plans by eligible seniors, and were thus risk averse from a lack of enrollment and/or profitability with their proffered plans. As the legislation was written and enabled, for the first year of the program, due to overpayment to PDP and MA sponsors, Part D plan sponsors owed Medicaid a net total of $4.4 billion for the year 2006. This amount of overpayment has been reduced to $600 million for 2007—a significant reduction, but this amount remains sizeable. These overestimated payments provided to plans were to be returned to Medicare. However, to further complicate this matter, CMS had no mechanisms in place to collect funds from such overpayments. It was finally set in play and accomplished well into 2007 for the 2006 payments, as such, sponsors held significant amounts of money for an extended period of time. Lobbyists exerted pressure to pass the MMA in the form in which it was enacted.