May 8, 2011 American Party
In Economy

According to Wikipedia the phrase “bread and circuses” is used to describe the creation of public approval, not through exemplary or excellent public service or public policy, but through the mere satisfaction of the immediate, shallow requirements of a populace.  In modern usage, the phrase has become an adjective to deride a populace that no longer values civic virtues and the public life.

The Republican and Democratic parties have combined to take bread and circuses to the max.  Rep. Dennis Hastert (R-IL) introduced the Medicare Prescription Drug and Modernization Act of 2003 on June 25, 2003.  Known today as Medicare Part D, this was a new unfunded entitlement benefit for prescription drugs through subsidies and tax breaks.  As of February 2009, the projected net cost of the program over the 2006 to 2015 period was $549.2 billion.  Now, the growing use of prescription drugs probably made drug benefit or drug discount legislation a worthwhile goal.  But the legislation itself explicitly prevents the Federal Government from negotiating drug prices as Federal agencies do for other programs.  The V.A. pays, on average, about 58% less than Part D.  A July, 2008 study from the House Committee on Oversight and Government Reform found that Part D pays on average 30% more for drugs than Medicaid and that this discrepancy produced a windfall of $3.7B for pharmaceutical manufacturers in the first two years.  This study also found that for the top 100 prescribed drugs, the Part D insurers received no rebates or discounts at all from the drug manufacturers for 74% of these formulations.

Of course, special interests drive legislation this poorly conceived.  Rep. Billy Tauzin (R-LA), who chaired the House Committee on Energy and Commerce with authority over this legislation, became the Chairman of the PhRMA a few months later at an annual salary of $2M. Click here for the full story.

The issue of drug purchasing costs under Part D arose again during the 2009 negotiations between the White House and the PhRMA over their support for the Patient Protection and Affordable Care Act.  The White House told the Pharmaceutical Manufacturers to negotiate directly with Sen. Max Baucus (D-MT).  Ultimately the healthcare industry sold Congress on a package of cost reductions that did not permit any reductions in drug costs for Part D or permit the re-importation of cheaper drugs from Canada.  So we’re paying manufacturer list prices for our Part D meds and borrowing the money as well.

If you think we must do better, register on this blog and leave your comments. We want to hear what you’re thinking and need your active participation.  Otherwise, the circuses and clowns will continue unimpeded.



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