The Affordable Care Act, Part Two: Prescription Drug Prices, Medicare Part D and Billy Tauzin

This is the second of two blog posts which discuss the role that corporate influence and campaign contributions played in the development and passage of the Patient Protection and Affordable Care Act, also known as Obamacare. This post discusses the influence of the pharmaceutical industry in shaping federal legislation, including the PPACA, to prevent the government from negotiating prices for prescription drugs.

Since the 1960s, the federal government has operated social programs like Medicare and Medicaid that are designed to expand quality affordable healthcare access to a greater number of American citizens. Through negotiations with hospitals, insurance providers and other companies involved in the healthcare system, the federal government has ensured that Americans enrolled in these programs pay significantly less than they would under a private health insurance plan. According to Paul Krugman, an editorial columnist and blogger for the New York Times, “studies by the Urban Institute and more recently by CBPP [Center for Budget Policy and Priorities] find that Medicaid is significantly cheaper than private insurance.”

There is one industry, however, that has lobbied successfully to prevent the government from using its purchasing power to negotiate prices: the pharmaceutical industry. These corporations, through political action committees, have donated extensively to the political campaigns of legislators who exert significant influence over healthcare policy. Through their lobbying group, Pharmaceutical Research and Manufacturers of America (PhRMA), these corporations have also heavily lobbied lawmakers to ensure that  their companies’ profits, remain excessively at the expense of the American people’s best interests.

In 2003, Congress passed the Bush Administration-supported Medicare Modernization Act, which included provisions to subsidize the cost of prescription drugs for Medicare beneficiaries. The program created through these provisions became known as Medicare Part D, and was fully enacted in 2006. One major criticism of the prescription drug benefit program was a provision in the MMA that specifically prevented the federal government from negotiating with pharmaceutical companies to lower the prices of prescription drugs. According to a study by FamiliesUSA, federal healthcare programs that engage in drug price negotiation, like the one run by the Veteran’s Administration, pay up to 57 percent less for prescription drugs than what the government pays under Medicare Part D. These extra costs do not pay for better, more effective medications or a more efficient system of care; they simply amount to enormous taxpayer subsidies paid to large corporations for no legitimate reason.

In 2009, during the debate over the Affordable Care Act, Senator Byron Dorgan (D-ND) proposed an elimination of restrictions on prescription drug reimportation, a process whereby the government purchases prescription drugs from other countries to make the market for these medications more competitive. Dorgan argued that eliminating these restrictions would result in lower prescription drug prices for Medicare, saving the government billions of dollars every year. More than anyone else, a man named Billy Tauzin was responsible for ensuring that Dorgan’s proposal was excluded from the version of the ACA which eventually reached President Obama’s desk. Tauzin was a member of Congress from Louisiana during the Bush Administration, and strongly supported the limitations on drug price negotiations that were included in Medicare Part D. According to Open Secrets, Tauzin received $56,000 in donations from pharmaceutical PACs from 2003 to 2004. By 2009, when the Affordable Care Act was being debated, Tauzin had become the chairman of PhRMA, the man whose mission it was to ensure that government policy reflected the interests of the pharmaceutical industry to the greatest possible extent. According to the Sunlight Foundation, Tauzin personally struck a deal with the Obama administration on PhRMA’s behalf to ensure that the limitations on drug price negotiation in Medicare Part D would remain in place.

Billy Tauzin is the personification of the ways that large corporations use their money and influence to ensure that government policy favors their profits over the interests of the American people. The complicity of both the Bush and Obama administrations in promoting and preserving policies which favor these corporations illustrates the extent to which corporations wield influence over Republicans and Democrats alike.


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