Trade Group Lobbying Paid Off on Medicare Vote

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Trade Group Lobbying Paid Off on Medicare Vote

 

 

Provided by New York Times Syndicate on 11/27/2003

by Christopher Rowland

 

 

 

 

 

 

Drug makers stand to reap the biggest rewards from the $400 billion Medicare

drug benefit approved Tuesday by Congress, but a host of other players also

stand to benefit, from doctors and hospitals to the makers of orthopedic shoes.

The intense lobbying on the Medicare bill by a variety of industry and trade

groups paid off, as the delivery of a prescription benefit to seniors was used

as an opportunity to affect other segments of the health-care economy.

Oncologists will receive more money for overhead costs. Hospitals that invest in

technology will get $700 million in new subsidies. The makers of biotech drugs

will get more money when patients are treated in hospitals. The bill even sets

up a fee schedule for custom shoes for diabetic patients.

There are some losers in the bill. Diagnostic laboratories, for instance, will

have their Medicare reimbursement rates frozen for five years.

``These things are fundamentally political,'' said Richard Frank, a professor of

public-health policy at Harvard Medical School. ``You've got a bill here that's

moving around a pretty big chunk of the economy, and as soon as you do that,

you've produced winners and losers.''

Most of the attention has been focused on the pharmaceutical industry, which

achieved the major goals: avoiding federal price controls that could erode

profits and blocking the importation of less expensive drugs from Canada.

Instead of caps, Congress permitted prices to be negotiated by drug companies

and a host of private-sector insurance managers that will run the Medicare plan.

``It's a huge win from the point of view of the industry,'' said Sam Isaly, a

mutual fund portfolio manager in New York with Eaton Vance Worldwide Healthcare

Fund. ``Without having a single buyer, there will be less pressure on price.''

With the massive infusion of new government spending, 3 percent to 5 percent

more medicine will be sold over 10 years, Isaly said. Estimating how much money

will be generated with that extra sales volume is difficult to say, analysts and

academics said. Seniors who have drug coverage through private plans now, or are

paying retail prices at drugstores, will shift into the Medicare system,

eliminating a good portion of the overall gains.

``It's not suddenly like they have a ton of new business all of which didn't

exist before,'' said Harvard's Frank. ``Some of it's going to be old business at

different prices.''

Another uncertainy for the drug industry will be the political climate moving

forward. Viren Mehta, principal of Mehta Partners LLC, a global health-care

investment firm based in New York, said the industry will immediately benefit

from the reduced pressure from Congress and the states, because 40 million

seniors without drug coverage will have access to a prescription drug plan

starting in 2006. But when seniors start buying huge quantities of drugs they

previously could not afford, it could lead the government to revisit the costs

of the program and demand deeper discounts, Mehta said.

In that case, he said, ``it could turn into somewhat of a negative outcome'' for

industry.

Drug manufacturers scored another key victory in the bill. The House and Senate

turned back an effort to permit the importation of prescription drugs from

Canada, where medicine is 20 percent to 80 percent less expensive than in the

United States because of Canadian price controls.

The bill also promises to generate a huge volume of new business for the

companies that manage benefits for prescription drugs, so-called pharmacy

benefit managers that play an increasingly large role in the lives of Americans.

But exactly how much business this will generate remains unclear. Details of

risk, competition, coverage, and other key factors will be decided later by the

Bush administration.

``Obviously they will get a lot more business,'' Frank said. ``Until you know

exactly how it works, its hard to tell how much. The devil is deeply in the

details.''

In the field of biotech drugs, oncologists scored a long-sought victory.

Physicians who administer cancer drugs in their offices will receive higher

Medicare reimbursements for overhead, including the cost of paying specialized

nurses. Biotech drugs administered in hospitals - which were reimbursed based on

a set of complicated calculations that produced low rates - will be reimbursed

at higher rates.

Large employers who keep their retirees on prescription benefit plans will

receive a tax subsidy. Doctors, instead of receiving a 4.5 percent cut in

Medicare payments in 2004, will receive a 1.5 percent increase. Rural hospitals

and doctors will receive $20 billion over 10 years.@ @The law also calls for

higher rates for mammograms and transport by ambulance.

``Everybody has a stake'' in the new law, said Vicki Greene, spokeswoman for the

Massachusetts Biotechnology Council.

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(The Boston Globe web site is at http://www.boston.com/globe/ )

 

 

c.2003 The Boston Globe

 

 

 

 

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