Pharma Marketletter

The 10 health maintenance organizations and pharmacy benefit managers approved by the Bush Administration to receive US Medicare prescription drug contracts contributed $6.5 million to federal lawmakers since 2000, claims consumer advocacy group the Foundation for Taxpayer and Consumer Rights. Members of the House of Representatives received over half this total, at $3.4 million, 80% going to Republicans, it adds.

The 10 firms awarded national contracts will likely keep 15%-20% ($90.0-$120.0 billion) of the $600.0 billion earmarked for the Medicare drug program over the next 10 years for overheads, advertising, executive salaries and profit and, as a result, seniors and taxpayers will pay more for prescription drugs, the group claims. In contrast, Medicare’s overhead costs are roughly 3%, it adds.

Recently, Democratic Senator Ron Wyden said he had enough votes in the Senate for a measure to allow Medicare to use its bargaining power to negotiate discounts, thus bypassing HMOs and PBMs and lowering costs of prescription drugs, the FTCR points out. It adds that most of the private companies offering Medicare drug coverage will negotiate volume discounts with firms but charge Medicare for overheads and profit.

Using data from the Federal Elections Commission, the FTCR estimates that the six HMOs – Aetna, Cigna Coventry Health, PacifiCare, WellPoint/UniCare, UnitedHealth and WellCare – and four PBMs – Medco Health Solutions, MemberHealth, SilverScript/Caremark and MedCo – approved for US-wide contracts, had contributed, during the period: – $6.5 million to Congressional candidates and political action committees since 2000, including $988,135 in first-half 2005, with 75% of this total being provided to Republican candidates and Republican-affiliated PACs, 25% to Democratic candidates and Democratic-affiliated PACs; – 50% more to Congressional candidates and PACs
during the time the Medicare prescription drug law was written (2004 election cycle) compared to the previous two-year period; and – $2.5 million (38% of the six-year total) to Congressional candidates and PACs during the 2004 election cycle.

The largest annual expenditures during 2003-4 were: Cigna $585,556; WellPoint $390,400; UnitedHealth $268,125; Aetna $253,600; and PacifiCare $204,500. In addition to the 10 national plans, further PBMs and other companies will provide drug plans at the state and regional level, it says.

“Under the current program, seniors and taxpayers will pay too much for prescription drugs by being forced to subsidize HMO and drug company profits,” stated FTCR spokesman David Fink, who called on Congress to “untie the hands of the federal government and allow the Medicare program to use its market clout to negotiate cheaper drugs.”