Congress, competition, and biotechnology

Anyone who wants a clearer picture of government at work for special interests should read Karen Tumulty and Michael Sherer’s piece in Time Magazine on the protectionist politics that go into keeping big pharmaceutical companies profitable.  At the heart of the issue is the amount of time between the release of a new drug – and in this case, biotechnology drugs – and the entrance of generic manufacturers into the market.  Since cost-saving is at the core of any healthcare reform measure, this is an extremely important question.

In Congress, committee chairmen are known as the old bulls for a reason: it’s unwise to provoke them. So it isn’t often that you see one get rolled by his own committee — especially when the chairman in question is the formidable and canny Henry Waxman and the issue in question is one that matters a lot to him. But that was what happened on July 31 as the House Energy and Commerce Committee was putting the final touches on health-reform legislation. Waxman’s fellow California Democrat Anna Eshoo offered a last-minute amendment that Waxman opposed. Knowing he would lose, Waxman decided to save face with a quick voice vote. But Eshoo insisted on a roll call, which would put every member on record. Waxman snapped at her, “You promised you wouldn’t do that!” The final tally was 47-11 against the chairman.

Waxman’s loss that day was a big victory for drug companies, which have spent more than any other segment of the medical industry to make sure that they come out winners in the effort to overhaul the nation’s health-care system.  It’s understandable the drugmakers would want a roll-call accounting of who their friends and enemies are, considering the size of the investment they are making on Capitol Hill: in the first six months of this year alone, drug and biotech companies and their trade associations spent more than $110 million — that’s about $609,000 a day — to influence lawmakers, according to figures compiled by the nonpartisan watchdog group Center for Responsive Politics. The drug industry’s legion of registered lobbyists numbers 1,228, or 2.3 for every member of Congress. And its campaign contributions to current members of Waxman’s committee have totaled $2.6 million over the past three years.

Obviously pharmaceutical companies want as wide a window of time as possible before they have to compete, but the price of these biotechnology drugs is extraordinarily high.  And that cost falls on consumers, on insurance companies (who transfer the cost into higher premiums) and on the government.  Generic drugs would bring the price down significantly (as would lifting the ban on re-importation of drugs, but that’s another story.)  Generics have saved the healthcare system an estimated $784 billion dollars in the last decade alone.

Of course, the argument against generics is that they essentially stifle innovation and make drug makers less likely to spend all that money doing research and producing new drugs.  I have doubts that this is really as big of a risk as the drug makers say it is.  Industries with more competition generally also have higher innovation and – more importantly – better products more attuned to consumer demand.  Protecting an industry generally just makes it more out of tune with the American consumer.  See: GM, Chrysler, etc.

Anyways, the Time piece is a fascinating look at how the wheelings and dealings of Congress play out in favor of the drug companies.  Go read it.

And for more of the story see Jane Hamsher on Anne Eshoo and “evergreening.”

(Image via Daylife)