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There is good reason for retired Americans to be skeptical of the prescription drug benefits being offered by Medicare. Both the discount card available now and the drug coverage coming in 2006 are unnecessarily complex and too expensive. It is clear that the law creating both programs was overly influenced by the pharmaceutical industry, which is having its own credibility problems. Some of the biggest names in drugmaking are being investigated for illegal marketing tactics and some have already admitted guilt.
The latest to acknowledge its troubles is Schering-Plough, which has caught the eye of federal prosecutors in Boston. To boost its market share, the company would send doctors checks of $10,000 or more to sign "consulting" agreements whose only requirement was that they prescribe the company's medicines, the New York Times reported. In another sleazy practice, the company paid doctors up to $1,500 per patient to conduct so-called clinical trials of its hepatitis C drug Intron A, though neither the company nor many of the doctors bothered to keep accurate records. It was a moneymaker because Intron A therapy costs thousands of dollars.
Prominent drug companies including Johnson & Johnson and Bristol-Myers Squibb have confirmed that they also have received subpoenas in a variety of investigations. Pfizer has pleaded guilty to illegally promoting unapproved uses for its drugs, and AstraZeneca admitted that it committed fraud by helping doctors overcharge the federal government.
Drug companies now spend twice as much on marketing as on research, and tens of millions more on lobbyists. Last year, the pharmaceutical industry spent $108-million and hired 824 lobbyists, whose main job was to influence the outcome of the Medicare drug bill, according to a recent study by Public Citizen. The money was well spent because the industry won two big victories. The law prohibits Medicare from bargaining for lower drug prices and it bans the importation of cheaper Canadian drugs.
That may not be the worst of it. Public Citizen found that 11 top staffers who had left the Bush administration ended up lobbying for the drug industry or managed-care companies. Afterward, four more officials, including then-Medicare head Tom Scully, went to work for companies that will benefit from the law. No wonder Medicare recipients are skeptical.
To their credit, some of the drug companies have faced up to their past indiscretions. At Schering-Plough, for example, there are new rules to keep the sales staff out of key decisions over clinical trials and physician education. But there is good reason for Americans to remain vigilant.
When the Medicare drug plan is up and running in 2006, the government (which is to say taxpayers) will be paying for almost half of the medicine sold in America. Considering the growing stain on the reputation of the pharmaceutical industry, there is little reason to believe taxpayers will be getting a bargain.