Attack of the giant pharmaceuticals

They’re coming. By November, unless a miracle happens and Congress passes legislation that guarantees seniors reasonable prices for the medications they buy, the pharmaceutical industry will carpet bomb this state in an effort to help you choose which candidate for U.S. Senate has the right plan for Georgians. It won’t be the incumbent.

But, truth is, the pharmaceutical industry is just one of the special interests groups that will invade Georgia during the summer.

The NRA, both sides of the abortion debate, labor, the national parties, you name it, they’ll all likely be buying TV time. Unless U.S. Sen. Max Cleland’s opponent falters badly, special interests will be looking to dump every loose nickel into this year’s federal election before campaign finance reform kicks in and they have to go loophole hunting in 2004.

“It’s going to be different from anything Georgia has ever seen,” Cleland says, referring to the amount of soft money and third-party issue ads that will be in this year’s race.

The reason the money will be spent is simple: Cleland is considered vulnerable, and Democrats control the Senate by just one vote, 50-49.

“Most people are going to put this on the short list of contests that could go either way,” says University of Georgia political scientist Charles Bullock. “With the Senate evenly divided, that’ll be yet another incentive to raise all the money you can and pour it into the six, eight or 10, however many contests end up highlighted.

“We certainly had a lot of money spent six years ago when Max was first elected, but a lot of that came from Guy Millner’s own checking account. Neither of the candidates will be able to simply write checks like Millner could.”

The pharmaceutical industry is climbing the charts. In 1990, it ranked 27th among 80 U.S. industries in the amount of money spent on political contributions. By 2000, the group ranked 12th with more than $26 million spent. So far in 2002, the industry ranks seventh, having already donated more than $10 million, according to information compiled by the Center for Responsive Politics. Currently, there are more registered lobbyists for the industry — 625 — than there are congressmen, and they pay most of their attention to Republicans. The party has received 72 percent of the industry’s contributions this year and pocketed 69 percent in 2000.

Cleland is quick to point out that Big Pharmaceutical spent more than $60 million in 2000 to torpedo the campaigns of politicians who favored a comprehensive prescription drug benefit. Those same interests probably will align against him this year. (Strangely, though, the industry has actually donated $62,275 to his 2002 campaign, more than $20,000 from Pfizer alone.)

Of course, if you don’t have blue hair, a prescription drug benefit isn’t likely to be the sort of thing that’s going to keep you up at night. But it is an issue Cleland may be able to exploit.

As he told a group of seniors at Wesley Woods Towers near Emory on Monday: “It’s the issue volunteered to me the most everywhere I go.”

The reason is simple. Drug spending in the United States continues to increase at a 15-20 percent clip every year, and that’s not just because doctors are writing more prescriptions. The roughly 48 million Americans receiving Medicare, most of whom live on fixed incomes, are being forced to make decisions between paying for the drugs they need and rent or food.

It’s now not unusual to hear stories about seniors who live near America’s border with Canada organizing trips north to take advantage of Canadian prescription costs — often half the cost of U.S. drugs. In fact, a woman in the audience at Wesley Woods told Cleland that she actually goes to a Canadian website — Canadameds.com — to get her prescriptions filled.

The reason Canadians can pay less is that their government negotiates discount drug rates in bulk, just like the U.S. Department of Veteran Affairs, and Cleland favors that policy for Medicare. The practice allows Veteran Affairs to save 40 percent to 50 percent compared to retail prices, according to the consumer group Public Citizen, and pharmaceutical companies are afraid that will cut into their profits.

The industry wants a plan that relies on the private sector and would “like to see market influences prevail,” says Nona Wegner, executive director of Citizens for Better Medicare, Big Drug’s feel-good-sounding lobbying front. As for using the government as a drug purchaser: “Specific price-control solutions would not be in our view.”

To frighten voters, the pharmaceutical industry has said that if it loses money, it will be forced to cut back on research and development — a likely subject of issue ads. But the numbers suggest the industry spends a lot more of its money telling consumers how great its products are than actually developing the drugs. In 2000, for example, GlaxoSmithKline “spent about 37 percent of its revenues on marketing and administration” and less than half that — 14 percent — on R&D, according to an editorial in the Washington Post by two former editors of the New England Journal of Medicine.

Meanwhile, the company enjoyed a whopping 28 percent profit and tax write-offs for drug development and marketing. And many pharmaceutical companies, such as Bristol-Myers Squibb, for example, don’t even develop their top-selling drugs. Instead, smaller companies license medications to their giant brothers.

The problem with the government getting involved in prescription drugs is that it costs a lot of money. Estimates for a comprehensive plan reach as high as $800 billion over 10 years.

The Congressional Budget Office did a study of a $318 billion, 10-year program. Under that plan, which is similar to a couple of proposed bills in Congress, seniors would have to pay a $50 per month premium and 50 percent of drug costs until they spent $3,500. The costs are so high that the budget office found that only a third of the people over 65 would enroll in such a plan.

Yet, despite being doomed to failure before it is even enacted, that plan is likely the only one the government can afford, thanks largely to the $1.35 trillion tax cut. That reality has led some congressmen to suggest the tax cut be rolled back to pay for a plan that will be more than a hollow gesture for seniors.

Republican U.S. Rep. Saxby Chambliss, Cleland’s likely opponent in November, has favored the sort of private sector-centered, market-driven “benefit” endorsed by the pharmaceutical industry. It would be cheaper and would likely allow the government to make the Bush tax cut permanent. Cleland voted for the original cut, but he’s yet to commit on making it permanent, as Georgia’s Democrat-in-name-only Sen. Zell Mill has suggested.

It’s an issue on which Republicans are already attacking him, referring to Cleland as Tax Max.

So Cleland may have a choice to make: a real drug benefit or lower taxes. It’s a decision Democratic Senatorial Campaign Committee spokesman Robert Gibbs suggests Dems should want to make:

“If the people who are arguing against a voluntary prescription drug benefit, under Medicare, that covers every senior in Georgia ... happen to be the CEOs and executives of the most profitable business in the world ... that’s a fight most Democrats, including Senator Cleland, would be more than happy to have.”??