Patent and Trade Policy Responsible for Soaring Health Care Costs?

An article in this morning's New York Times caught my eye.  A guy had been been quoted something in excess of $65,000 for a hip replacement in the US -- excluding surgeon's fees -- and ended up going to Belgium and getting the job done for $13,000.  His insurance didn't cover the replacement because it was a pre-existing condition; came from a sports injury.  This, again, is my biggest problem with ObamaCare.  There are many instances where US consumers pay large multiples of what is paid in other countries for identical care.  The guy specifically said he was a bit leery about going to some place like India, where he could get it done even more cheaply.  But Belgium -- the Belgians are probably at least as competent as the US.  And of course, in the US, there's a good chance one would end up with an Indian doctor in any event.  There really isn't anything special about US doctors or hospitals, except their ability to make money off of the health care system.

I haven't studied ObamaCare closely, so maybe this will sound stupid.  But perhaps there is some way of literally using "medical tourism" to reduce our health care costs.  I.e. I have a sinking feeling that under ObamaCare, that hip would have been replaced in the US no matter what (right?  discrimination against people with preexisting conditions is one of the reasons for ObamaCare isn't it?), at a cost of $65,000, plus surgeon's fees.  Unless of course a panel decides it's not needed.  But shouldn't that same panel figure out how much it would cost to have the work done in Belgium, or even India?  I.e. If it's really one-fifth the cost, why not put the patients on planes?

Note that I have essentially given up on the idea of controlling costs within the US.  Those industries are just too strong and have too much of a lock on the legislative process, and, far from being reined in by ObamaCare, are going to be beneficiaries of it.  That was Obama's big chance, and he blew it.

The article focuses on the cost of an artificial hip itself.  The guy in question was offered a hip for $13,000, and was told the hospital fees (excluding surgeon fees) would bring the cost up to 65K.  Another guy was charged $37K for a hip.

It turns out that it only costs $350 to make an artificial hip in the US (in other countries, its down to $150, but there might be quality control issues).  There is a cartel consisting of 5 hip and knee manufacturers that, through patents and trade policy, manage to keep the price of hips and knees high.  They are able to charge hospitals $4500-$7500 for a hip, and of course, the hospital tacks on its own markup to that price.

The article asserts that the basic artificial hip has been around for decades, but that these manufacturers keep on patenting minor tweaks, with the result that they are able to keep prices high.  And of course, these patents, plus the huge expense of FDA approval, makes it hard/impossible for foreign products to break into our market.

At first, I didn't realize that the article went on and on, and I did an independent search for the members of the knee/hip cartel.  They are:

Stryker Orthopedics
Biomet
DePuy Orthopaedics unit of Johnson & Johnson
Zimmer Holdings
Smith & Nephew (a British company with an orthopedics subsidiary in Memphis).

And what did I find on the internet search?  Just an article about unseemly conduct by at least four of these -- providing kickbacks to surgeons who push their products on consumers (see http://www.nytimes.com/2007/09/28/business/28devices.html?ex=1348718400&en=ab27ba64e456cd60&ei=5088)

And here's the original article, on which this post is based: http://www.nytimes.com/2013/08/04/health/for-medical-tourists-simple-math.html?nl=todaysheadlines&emc=edit_th_20130804

As mentioned, the article goes on and on, and also discusses (and links to) the kickback scheme I found above.  The cartel spends $30 million per year lobbying Congress.  Etc. etc.  Almost too depressing to read.

Convict George Zimmerman of idiocy but . . . .

George Zimmerman employed extremely poor judgment.  George Zimmerman -- and people like him -- should not be permitted to carry firearms under any circumstances.  Zimmerman was the direct and proximate cause of the death of a human being -- Trayvon Martin -- a teenage boy who was simply minding his own business that night, but who attracted Zimmerman's attention by being black and wearing a hoodie.  The result of Zimmerman's stupidity -- in getting out of his car, following Martin, etc., was completely foreseeable.  He was a Pillsbury dough boy with a gun.  If the confrontation he started ended up in a fight, he would lose -- but for the gun.  And since confrontations often end up in fights, the gun came out and a boy is dead.

A jury has apparently found that Zimmerman acted in self defense.  Apparently the prosecution had to prove beyond a reasonable doubt that it was NOT self defense.  And there, the fact that Zimmerman was a wimpy, overweight, soft, wannabe cop worked very much in his favor.  The jury could well believe that the athletic black kid got the upper hand, and was winning the fight.  And apparently if they believed that, then it was ok for Zimmerman to pull out his gun and shoot Martin dead.

But I'm not here to talk about that.

I feel bad for the black community.  I admit I'm white, or white-ish, but in my defense I've spent over $100,000 trying to better the lives of black people.  I like black people a lot.  I have black friends.  I have black kids.  I have a black son who wears a hoodie sometimes.  I am worried for him.

But here's what I am sick and tired of.  I am sick and tired of seeing letters or Op-Eds from Ivy League African American males who complain that America is racist and that the result of it is that they can't go outside wearing a hoodie because (1) white people look at them with suspicion, and (2) sometimes they even get stopped and possibly even searched by the police.

Ok, I've been stopped and searched by the police, apparently because I resembled another white guy.  Unusual perhaps, but I got over it.  Just another story to tell.  So I'm not really sharing the sense of  "humiliation" that these Ivy League African Americans feel so deeply when they are stopped or suspected.  Afterwards, they can still go home and look at their diplomas.  I can't quite figure out what causes the alleged "humiliation," although I sense that my situation is somehow different.

I thought of a fable that might help us analyze the problem.

Imagine there is a place where the only two species are lions and hyenas.  Ok, let's humanize them a little -- they can talk and some of them wear hats.  Usually, lions and hyenas get along just fine -- many lions have hyena friends, and vice versa, and hey, they even intermarry. But the fact of the matter is, one out of every ten lions, if he happens to be having a bad day, and is hungry, will chase down and kill and eat a hyena.  Pretty easy to do, since lions are bigger, smarter, faster, and stronger (and better looking) than hyenas.  Interestingly though, the only lions who have ever been seen doing this are lions wearing hats.

Now hats are kind of a fashion statement with lions.  So a lot of lions wear hats, and they like to wear hats.  They feel they have almost a natural right to wear a hat.

But what happens?  Hyenas begin to grow wary around lions with hats.  They know that most such lions are harmless and friendly -- and maybe even graduates of Ivy League schools -- but they can't see past the fact that lions with hats are responsible for a disproportionate amount of the hyena killing and eating that goes on.

So what's a hyena to do?  They cross to the other side of the street.  If they happen to be the police -- and have weapons to back themselves up -- they might question lions with hats who seem to be walking in mostly-hyena neighborhoods.

And now, what's a decent, Ivy-Educated male lion supposed to do?  He has a choice.  Either stop wearing the hat -- and the hyenas will treat you as harmless and accept you as a "good" lion, or keep wearing the hat, and put up with the scared looks, and the possible police harassment.  Neither choice is perfect.  But at least you're a lion, not a hyena.  Some people are born blind, deaf, or otherwise handicapped.  Some people are born ugly or grow ugly as they age.  Some people go bald.  Life is unfair in many ways.  This is one small way in which life is admittedly unfair to lions.  But what am I (a hyena) supposed to do about it?

For the lions who truly want to make a difference:  they can work within their own community to try to stop the hungry hat-wearing lions from eating hyenas.  For the lions who'd rather simply cash in on their Ivy League degrees, they can write whiny letters to newspapers.

And the Ivy-Educated African American males have the same choices.  Don't they?  Somebody tell me what I'm missing.

Ok, I see I've written something very similar to the column that Richard Cohen wrote earlier this week in the Washington Post about Racism vs. Reality.  And yes, I read the column when it came out.  I don't think I would use the same terms that Cohen did (I'd much rather just keep talking about lions and hyenas).  In fact, it was the first-published comment (of 4000) -- by an Ivy League African American male complaining about the way he is treated when he wears a hoodie -- that caused this particular rant.  If Cohen's remarks are racist (and lots of people seem to think they are), then maybe so are mine.  But I am nothing if not educable.  Please educate me!

I-495 Express Lanes "Administration Fee" Scam

IF YOU ARE ONE OF THE MANY THOUSANDS OF PEOPLE WHO ARE BEING HOUNDED BY TRANSURBAN FOR HUNDREDS OR THOUSANDS OF DOLLARS, OR IF THEY'VE ALREADY GOTTEN A JUDGMENT AGAINST YOU -- or if you are just mad because they are asking you to pay a $12.50 administration fee for an obvious mistaken entry --  please read through the comments below, and email Lisa Marie Comras (lmsdigiulio@gmail.com), who is organizing a class action against Transurban.  Her attorneys will contact you and then you'll be able to decide for yourself whether you want to be part of the move to hold Transurban accountable.

According to Emily Miller of Fox 5 DC, Transurban filed 26,000 lawsuits against drivers in 2014 alone.  Maybe you're one of those drivers.  If you're facing an immediate court date, you might find some good ideas here or here, courtesy of attorney David Bernhard, via Emily Miller.  But when that's over, you should still strongly consider joining the class action.

Original post:

I've posted about the I-495 Express Lanes (on the DC Beltway) before.  But now I have fallen victim. I got on the Beltway to go to work a couple of months ago.  I don't do that very often -- probably hadn't done it at all since the Express Lanes went up -- and all of a sudden found myself alone on the Beltway, in some lanes partitioned off from other traffic.

And for the record, there wasn't any other traffic to speak of -- it was all going the normal 65 mph, and I wasn't gaining anything by being in the express lane.  I don't have an EZ Pass.  I got off at the very next exit, and rejoined the normal Beltway traffic and got into work, no problem.  But a few days later, I get a letter from I-495 Express.  It tells me that I owe them thirty-five cents (35 cents) for driving on their road for that stretch.  Oh, and by the way, I also owe them a $12.50 "administration fee" for their trouble of tracking me down to ask me for the 35 cents.

In other words, rather than simply forgive obvious mistakes like mine -- i.e. one-exit trips on the express lane, at a time of day when there is no traffic in that direction -- they have turned our mistakes into a potentially huge and predatory profit center.  It's not about the 35 cents, it's about the 12 dollars.  And I'm sure it doesn't cost them anywhere near that amount to send out a letter.  They are clearly making at least $10 off of every 35-cent mistake.

I had an IM exchange with them that I would reproduce here, except that it makes me too easily identifiable.  But the gist of it was that I was screwed.  If I didn't pay the $12 within 30 days of the letter, the "fine" goes up to $25.  And if I don't pay that, they turn it over to collections, with almost certainly a mark on my credit record.  I don't know what would happen if I had let them sue me -- I think I probably would have had some decent defenses.

It turns out if you pay on-line, the price is only about $10.  Still a huge and unwarranted profit for them.

So what we need is an ambitious class action lawyer to represent us to get our money back.  The legal theory is simply that it's toll road piracy by a private entity, taking advantage of mistakes, and that it's a farce to call it an "administrative fee" because their administrative expenses are clearly just a fraction of the total amount.  Discovery would be extremely useful here -- it would be nice to know just how much money they make off of this, and to get discovery on whose bright idea it was to impose the fee in the first place.

I'd be willing to help, but for various reasons, can't participate in a meaningful way.  If you are a class action lawyer and want to have some fun with this, I'd be happy to provide you more details about my situation -- just leave an email address in the comments.

And if this has happened to you and you want to join the class, just leave a note below (can be anonymous for now), tell us your story, and keep an eye on this space.

By the way -- the one tip I can offer to those of you, like me, who knew they were in the wrong lane and got off as soon as they could.  495Express has a program where if you know that you made that mistake, and are able to pay them $1.50 plus the missing toll before they are able to send you the letter demanding $12, you are off the hook.   Of course, it's difficult to figure this out until after you've gotten the letter.  Until then, you don't necessarily even know who you are dealing with.  Details here.

UPDATE:  As you can see from the comments below, part of the problem is that Transurban -- the Australian outfit that is sweeping in all of those "administration fees" -- apparently sometimes waits with sending you the letter until you've accumulated dozens of violations.  At that point, you might owe them about twenty bucks in tolls, but hundreds of dollars in "administrative fees."  I've now drafted a letter (available here) that you might consider sending if you find yourself in that position. In short, the letter includes a "payment in full" check, which, if cashed, should get you off the hook legally.  If they decide not to cash it and turn your account over to collections, you need to be sure to tell the collections people that the case is "in dispute," and you probably need to monitor your credit record as well to make sure that you are not improperly reported.  It's unlikely that you'll ever be sued on the matter, because it's not worth a lawyer's time to go after you for a few hundred dollars.


UPDATE 10/22/14:  Emily Miller of Fox 5 DC (who also seems to be a right-wing gun nut (http://www.amazon.com/Emily-Gets-Her-Gun-Obama/dp/1621571920) has done some real good here by shining a spotlight on Transurban and its predatory practices in two news segments in the past 10 days.  And she says that she'll keep on top of this issue, which is a good thing. But so far, she has absolutely zero constructive suggestions for how this will stop -- she just suggests that if you have a problem, you should contact Transurban.  Many commenters below -- and people who talked to Emily Miller -- can tell you how that goes.  She doesn't mention the possibility of bringing a class action, which I discuss at more length in various replies to this post.  As I said somewhere else, media attention of the kind that Emily Miller is giving the issue is just the kind of motivation that a class action lawyer needs.  Now someone just needs to go out and find one!  (I've posted phone numbers for three different firms below).

Emily's most recent article contains a rather significant math error, which I hope she corrects.

Here's the direct quote:

"Well, 96 percent [of customers having problems with Transurban] sounds good -- until you do the math. There are one million drivers on Transurban's 495 Express Lanes. So that means there are 4,000 people out there with these problems. And I found over a dozen of them in just one week."

Actually, if you really do the math, you realize that 4% of one million is 40,000.  That's a lot of drivers who have had problems with this company.  And it sounds like a pretty good size for a class action!

UPDATE 10/29/14:  Two very positive developments.  First, as reported by WTOP here, Transurban is going easy on "first time offenders" -- if you're a first time offender, after you receive an invoice, you have 60 days to prove that you have "rectified the issue and pay the tolls in full."

Here's a quote from a Transurban person named Coffee:

"If you get an invoice that has more than one trip, more than 10 trips, more than 15 trips, you call us. You tell us what the issue was, that you've put funds in your account. We collect your tolls and you move on. However, the next day, you've got that clean slate and it's up to you to ensure that you've got your EZPass properly mounted, that you've got funds in your account and that your license plate is linked to your EZPass so that you avoid that in the future," 

The article goes on to say that if a first-time violator's case goes to court, Transurban will cap the fees at $2,200. According to Coffee, "With the new program in place, we will not be seeking more than $2,200 on any first-time violator no matter what." 

The article is not very clearly written -- I can't be one hundred percent sure whether a first-time violator means a single violation or not, although from the context, it looks like you can be a "first time violator" with multiple violations.  Assuming the latter is the correct interpretation, it sounds like some of the commenters below should be able to get off for only $2,200.  Still a lot of money, but not necessarily bankruptcy-worthy.  If you're in that position, it sounds like you should call Transurban and ask how their new policy applies to you.

And here's a report about an ongoing court case -- Toni Cooley against Transurban.  Toni had over $10,000 in fines, including about $2000 in "administrative fees".  The judge wiped off the administrative fees because Transurban couldn't prove that it cost them that much money just to send out a few notices.  So that's good to hear -- the administrative fees are what set me off on this whole stupid thing to begin with.

UPDATE Nov. 17, 2014.  One of our readers is organizing a class action against Transurban.  I'm reproducing her post up here just so it doesn't get lost a a reply to a comment:

Lisa-Marie ComrasNovember 17, 2014 at 7:38 AM

I am serious about a federal class action. I have an attorneys contact information and one other person that I have thus far met with that is moving forward with me. The more people, the more seriously we are going to be taken. email me - lmsdigiulio@gmail.com. Give me your total tolls (before any admin or civil penalties) and then give me your total paid/settled/etc.
For example: MINE: $14.20 total - $10,751.40 judgment

Steven Brill On ObamaCare

I haven't read it, but eventually I will; most of what I write below is what I remember from hearing him on the Diane Rehm show on Wednesday Feb. 27.  Steven Brill has done the research and has arrived at the obvious conclusion -- the problem with ObamaCare is that it does almost nothing to control costs.  He makes the point that the the Health Care lobby -- insurance companies, hospitals, and the pharmaceutical industry -- is by far -- very far -- the biggest lobby in Congress.  Apparently it simply dwarfs all competitors, including both the military industrial complex and the oil and gas industry.

In fact, by sending people to private insurers, ObamaCare goes in exactly the wrong direction.  Right now, Medicare is able to negotiate much better rates than private insurers.  The obvious question for the health care reformers was why not build on that and give everyone Medicare or something like it?  That might have been Obama's original "single payor" vision, but he abandoned it for the sake of compromise, and now we've got what we've got.  And it's going to be all the harder to pass real reform  after all the political capital spent passing ObamaCare.

The point came up when a caller asked why Congress is currently considering the idea of raising the age of Medicare eligibility as a way to "save" money.  The caller pointed out, and Brill agreed, that that's exactly backward -- if the goal is to "save" money -- i.e. reduce the nation's health care costs -- we should be lowering the age for Medicare eligibility, not raising it.  Those "older" people still need healthcare -- in fact, ObamaCare mandates that they get it -- and we are now just forcing them to get it at a higher rate.

The Supreme Court has now told us that ObamaCare's mandatory insurance is a "tax" -- we need to be thinking of it as a tax, especially when we are trying to balance the budget.  Raising the Medicare eligibility age thus imposes this "tax" on consumers who are forced to buy insurance, and that tax money just ends up going to the insurance companies.  So really, the idea of raising the Medicare eligibility age is just one more form of corporate welfare -- yet another transfer of our tax dollars to corporate America.

There has been a good deal of criticism of and reaction to Brill's article, and I haven't read much of that either.  Here's something from the Washington Post.  The real question though is why these debates didn't occur in Congress and the White House when ObamaCare was being pushed through.

The basic problem is that unlike in any other area, consumers have very little choice at all in health care, and thus very little bargaining power.  The result is that they can be charged seventy-odd dollars for four boxes of gauze pads, or $1.50 for a tylenol tablet.  In every other industry, there is competition and choice -- if a consumer doesn't want to pay $50 for a bandaid, he could just go to the next vendor.  But that's not the way healthcare in America works.  And the one thing that consumers might conceivably have had -- the ability to collectively say "enough is enough, we won't pay more than x, y, and z for this that and the other -- has basically been taken from us by ObamaCare, which simply mandates that we buy insurance, and let the insurance companies and health care providers work out the cost of health care.  Note that what I am advocating is what Brill is advocating as well -- government price controls on health care.  It's easy for capitalists to argue that price controls are a form of socialism.  But in this case, that's not really what it is -- it is (or should be) simply the PEOPLE'S way of bargaining for a product that they pay for.  Government FOR THE PEOPLE should be effectuating that -- instead, it is taking away people's ability to do that.

Death by Drone

David Cole, a constitutional law professor at Georgetown, raises some good points in today's Washington Post about our government's use of drones to kill American citizens.

His basic point:  While perhaps some of our citizens need to be killed without due process for the greater good (i.e. keeping the rest of us fat dumb and happy in our American lifestyles), the government of a free country at least needs to acknowledge that it carried out the killings.  Our government isn't even doing that, and hasn't done it in the case of Anwar al-Awlaki, the American citizen Al Quaeda leader we droned off in September 2011.

At the end of the article he gives what is most likely the government's justification for refusing to take responsibility for the killings:  The countries that permit us to use their airspace to carry out these killings have given us that permission on the condition that we don't admit to them.

So I admit it's a dilemma, and I'll also admit that I don't have enough information to balance the pros and cons of the policy.  If the government knows for a fact that the only way to stop Al Quaeda from blowing up a few American cities with nuclear bombs is to kill a few citizens, and if the only way to kill those citizens involves making agreements with other countries that we won't acknowledge the killings, then perhaps the policy is justified.  A shame, a departure from the principles on which our country was founded, but possibly justified.

But the question remains:  Why exactly do we find ourselves in this position?

And one possible answer is: Because we have permitted corporations to dictate our foreign policies for way too long.

You might not have seen that coming, but here's my point:

I actually can't point to anything specific.  Osama Bin Laden hated us because of our policies relating to Israel, and I honestly don't know what the right answer is on that one, and I don't know whether our policy on Israel is dictated by corporations.  But much of our policy -- including the propping up of dictators over the years for the sake of oil, bananas, you name it -- has been dictated by corporations.  Those policies are why many people in many countries around the world hate us.  And that's why we have no credibility when we make tough moral decisions involving other countries, like Israel.

The goal after 9-11 should have been to change that.  But we are just making it worse.  The Iraq war was dictated by corporations like Bechtel and Halliburton, salivating at the chance to get in there and rebuild a country that we were going to destroy.  It had nothing to do with the morally-justified "war on terror."  The Iraq war led to Guantanamo, and Abu Ghraib, which caused more people to hate us.  In other words, ever since September 2001 -- when much of the rest of the world already had ample reason to hate us -- we have just just been throwing more fuel onto the fire of hatred.  The drones are simply one more example on a long list.  Not only are they causing us to lose further credibility abroad, but, as evidenced by Cole's piece, they are also causing thoughtful U.S. citizens to start to wonder what this country is coming to.

Cole gives a link to an article that gives a link to the Government's memo justifying the practice.  Amusing how just because the memo happened to be leaked to NBC, NBC has put its watermark all over it.  NBC has no proprietary right in the memo, as far as I can tell.

Amgen Buying State Legislatures to Prolong Profit Stream

The whole idea of a patent system is that (1) the public gives the "inventor" a monopoly for a period of time (currently 20 years from the application date, with the potential for extensions based on processing delays), and (2) AFTER that time is up, the patented product may be produced by anyone.  The idea is that after the patent expires, there will be unrestricted competition and prices will fall.  And in principle it works -- that's why you can buy Prozac at WalMart for $4 a bottle, when it used to cost hundreds.

But the problem is that the makers of drugs make SO much money while the patent is still in force that  they do everything in their power to keep that cash stream alive, even after the product should by all rights have fallen into the public domain.  There is a long list of shenanigans employed by branded drugmakers to illegitimately prolong those cash flows.  And now I've learned of one more.

As reported in yesterday's NYT, Amgen and other biotech companies are now lobbying states to prevent generic competition AFTER the patent has expired.  The argument is that the generics are not producing IDENTICAL products, but are merely producing "biosimilars," and who can be sure that those biosimilars are safe?

If safety of biosimilars is truly an issue, that is yet one more argument for federal control of the pharmaceutical and biotech industries.  To effectuate the patent bargain, after the patent expires, the federal government should just step in and TAKE OVER the biotech company's manufacturing process, and sell the results at generic prices, possibly through generic companies.  If this is considered a "taking" then perhaps the biotech company should get some "just compensation," pursuant to the Constitution's takings clause.  But that "compensation" does NOT amount to a prolonged billion-dollar-a-year monopoly for technology that should be in the public domain. 

Interesting facts from the article:  

1.  Biotech drugs are drugs that are produced by cells, as opposed to synthesized in chemical reactions.

2.  Biotech drugs now amount to one quarter of the $320 billion annual spending on drugs in the U.S. And that percentage is growing.

3.  Biotech drugs are generally dispensed in the doctor's office, not through pharmacies.  Nevertheless, it's obviously worth the biotech companies' while to stop pharmacies from selling generics whenever they can.

4.  Amgen and Genentech are the two biotech companies that are writing the legislation.  As documented here and here, if Amgen were a human being, it would probably be in jail for fraud.  But since it isn't, its money is still good in state legislatures (and, of course, Congress).

5.  Two of Amgen's biggest sellers are the anti-anemia drugs Epogen and Aranesp. As documented elsewhere (see links in 4, above), Amgen has successfully and dishonestly caused both of these drugs to be over-prescribed.

6.  Other Amgen drugs are Enbrel, Neupogen, and Neulasta.  Enbrel is for psoriasis and rheumatoid arthritis; Neupogen and Neulasta protect chemotherapy patients from infections.  

7.  Genentech (owned by Roche) makes Rituxan, Herceptin and Avastin, all of which are top-selling anti-cancer drugs.

8.  The patents on all the drugs listed in 6 and 7, except for Enbrel, will expire very soon.

9.  The state legislators introducing the bills at issue admit that they were written by Genetech and/or Amgen.

10.  The Virginia house of delegates voted 91-6 in favor of such a bill. 

Another $500M Pharma Giveaway -- Senate to Amgen

From today's NYT, in an article by Kevin Sack and Eric Lipton.

About a  month ago, Amgen pled guiltyto having fraudulently, illegally marketed one of its anti-anemia drugs, Aranesp.  It agreed to pay criminal and civil penalties totaling $762 million.

But what the government taketh away, the government giveth right back, if you know what you're doing.  The government -- led by Orrin Hatch, Max Baucus, and Mitch McConnell -- has now given back $500 million.  It's only a matter of time before Amgen gets the other $262 million back, with interest.

In case Amgen sounds familiar to readers of this blog, it was only in July 2012 that I posted about the billions of dollars of profits it had made by endangering patient health by encouraging physicians to overprescribe Epogen, another anti-anemia drug.  http://pricefixer.blogspot.com/2012/07/anemia-drug-scam.html

How did this latest grift happen? Amgen is still the world's largest biotech firm.  That gives them enough money to hire 74 lobbyists, and contribute tons of money to Senators like Orrin ("never met a drug company I didn't like") Hatch ($59,000 plus large donations to "OrrinPAC" and Utah Families Foundation), Max Baucus ($67,750 plus large donations to "Glacier PAC"), and Mitch McConnell ($73,000).  Dan Todd, one of Hatch's top aides, was a lobbyist for Amgen before he switched to Hatch and started working to prevent Medicare price controls from applying to Amgen.  Amgen lobbyists Jeff Forbes and Hunter Bates are former chiefs of staff of Baucus and McConnell, respectively.

And that in turn enables them to ensure that legislation that threatens their income stream for the sake of patient health and Medicare savings doesn't actually apply to them.

The legislation at issue was actually the "fiscal cliff" bill, which most ordinary people probably thought had something to do with trying to save money for taxpayers.  But instead, it delays by two years imposition of Medicare price restraints on Sensipar, Amgen's flagship, overprescribed dialysis drug.  Sensipar is not mentioned by name -- that would be too obvious -- but instead is the most important member of a small class of drugs that benefit from the provision.

The provision is projected to cost Medicare up to $500 million over those two years.

Who pays for Medicare?  YOU and me.  And the excuse of the the bought-and-paid for political hacks who gave Amgen our $500 million?  Per the New York Times, they said: "it was necessary to allow regulators to prepare properly for the pricing change"; "it would give the Medicare system and medical providers the time they needed to accommodate other complicated changes in how federal reimbursements for kidney care were determined."

So let's just keep on paying Amgen too much -- we're just not ready to pay them less!

According to the NY Times, there has been an ongoing "five-year effort in Washington to control the enormous expense of dialysis for the Medicare program by reversing incentives to overprescribe medication."  So really, they've already had five years to prepare to start paying less.

More specifically, the effort started in 2008, when Congress figured out that providers had a big incentive to overprescribe dialysis drugs (see link re Epogen above), since they were being reimbursed separately from the dialysis treatment.  Congress realized that by bundling reimbursement for dialysis with reimbursement for dialysis-related drugs, it could cut down on such overprescription and save money and ensure that providers made more responsible decisions regarding patient health.  But Congress will never snatch away drugmaker profits too quickly -- it tried to ease them into it, including by making sure that the "bundling requirement" would not apply to Amgen's Sensipar until 2014. The current legislation extends that to 2016.  Let's hope eight years will be enough for regulators to prepare for this change. 

The irony of putting this in the fiscal cliff legislation -- which has to do with balancing the budget after all -- is too rich.  We could have bought TWO bridges to nowhere for this amount of money.  

The NYT explains that it got through as a result of the political clout of Amgen-owned Finance Committee Members Senate Minority Leader Mitch McConnell, Republican of Kentucky, and Senators  Max Baucus, Democrat of Montana, and Orrin G. Hatch, Republican of Utah.  For some reason, these buffoons "hold heavy sway over Medicare payment policy as the leaders of the Finance Committee."

And where was the Obama administration?  Amgen's lobbyists have logged over a dozen White House visits since 2009, and according to the NYT, Amgen lobbyist Tony Podesta's firm has "unusually close ties to the White House."  And Amgen employees donated more than $141,000 to Obama's reelection, although of course they probably donated just about that much to Romney as well. The Company says it didn't contact the administration about this particular piece of legislation, and the administration says it had nothing to do with the provision.

Of course, hardly anyone knew that the provision was in there.

Really, I should let the Senators defend themselves.  Here's Baucus's defense, via spokeswoman Meaghan Smith: “What is the best policy for Montanans and people across the country lies at the heart of every decision Chairman Baucus makes . . . .  It’s as simple as that.”

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So let's take a minute to absorb this.  The entities that we put in charge of our nation's health -- the drug companies -- are guided by a profit motive (that's capitalism, after all), that causes them to engage in criminal conduct.  Their thirst for profits causes them to suppress studies that contradict their health claims, and to encourage doctors to prescribe drugs that patients don't need, or which are affirmatively harmful to patients.  When caught, they pay the fines and then are immediately back to their old tricks, ably assisted by the Congress.

I'm not blaming the drug companies.  That's how capitalism works and it's how capitalism is supposed to work, and somewhere in there, we decided we'd get the best drugs through a capitalist system, aided by patents, which of course, suppress one of the best things about capitalism -- competition.

But this again raises the question:  Is this patent-assisted capitalism -- especially in an era of a Congress all-too-willing to sacrifice patient health for campaign contributions -- really the best way to cause new and useful drugs to be produced, and moreover, to cause the right drugs to be prescribed, in the right doses, to patients?

In capitalism, the market takes care of all that.  Producers produce what customers want, and they do so in competition with other producers.  That ensures that customers get what they want, at the lowest possible prices.  This is working better than ever in today's internet age, where the theoretical notion of "perfect information" is becoming more and more of a reality.  I can go to amazon and read customer reviews and compare products and prices in ways I never could before.  And I can buy great things more cheaply than ever before.

But that doesn't work with drugs.  With drugs, there is nothing approaching "perfect information."  The "information" is often suppressed by the drugmakers, or distorted in their efforts to get doctors to continue to prescribe -- and overprescribe -- their drugs.  And all of the market incentives tell the drug company to keep on pumping out bad information, because that is what will keep prices and sales high. Consumers have no way to tell whether an on-patent drug is better or worse than something that's off-patent.  

If we could simply figure out a way to compensate drugmakers on a one-time basis when they come up with a valuable drug, all of the distortions would disappear.  The drugs would instantly become generic, and true free competition would reign.  And all drugs would cost $4 a bottle.  Yes, we would have paid a huge premium up front for the drugs, but after that, the market would ensure the most effective and proper distribution of the drugs.  All the distortions would be over.  This is what the think tanks should be figuring out.  

UPDATE Jan. 29, 2013:  The NYT reported yesterday on Amgen's efforts to get State legislatures to restrict generic competition for biotech drugs.