States vs. BigDrug Co's - Tobacco All Over Again

[Timber Loftis]

From todays NYTimes:
http://www.nytimes.com/2003/01/14/national/14DRUG.html

Prescription drug prices are ridiculous. Yeah, I know we've all seen commercials recently where these greedy bastards have bought spots advertising how great they are at giving our free medicine. $20 million in drugs given out by XYZ Co. - puh-lease. Making drug prices reasonable would amount to that much in one week.

The ABA (American Bar Assoc., not Abba the music group ) recently published articles surmizing that the new coalition drug wars have BigDrug Co's teaming up against the State officials, who are teaming up. It is completely analogous to what happened to BigTobacco. Let's see what unfolds.

States Organizing a Nonprofit Group to Cut Drug Costs
By MILT FREUDENHEIM

In the strongest challenge yet in the battle between the states and the manufacturers and distributors of prescription drugs, nine states and the District of Columbia are organizing a joint nonprofit operation to manage their prescription plans, officials in charge of the effort said yesterday.

The states intend to hold down spending on medicines for millions of state employees and Medicaid beneficiaries by creating an organization designed to be immune to drug makers' promotions of many of their more expensive products.

The new organization is being formed at a time when two-thirds of the states are reducing Medicaid coverage, restricting eligibility or ending benefits altogether for at least one million people. A study by the Kaiser Family Foundation issued yesterday said state Medicaid directors expected further cuts in benefits and eligibility.

Dozens of states are facing their largest deficits in years. Their combined shortfall for the current fiscal year is estimated at $45 billion, and the deficit for next year is projected to increase sharply, reaching 20 percent or more in some states.

Health care spending is a major part of the financial problems the states face, and drugs are the fastest growing component.

New York, for example, spent $2.4 billion on prescription drugs for more than 3 million Medicaid recipients in 2001, 7.5 percent of all its Medicaid spending and an increase of 75 percent from 1998.

"New York has the most to gain," from the new organization, said Peter E. Shumlin, chairman of the National Legislative Association on Prescription Drug Prices, the group that is organizing the new benefit plan. Mr. Shumlin, a former Vermont state senator, said New York "is doing the least of all the states" in his group to hold down drug spending.

The new drug benefit manager will try to help New York and the other eight states — Maine, Massachusetts, Connecticut, Rhode Island, Vermont, New Hampshire, Pennsylvania and Hawaii — maximize the drug benefits they can provide given their current budget constraints.

Drug benefits for the state employees and Medicaid recipients in most of those states are currently managed by private companies called pharmacy benefit managers. Under their current contracts, these drug plan managers pocket sizable undisclosed payments, known as rebates, from drug makers in return for promoting certain drugs. They then create lists of drugs, called formularies, for different ailments and often set prices that induce drug plan members to opt for the drugs that have been promoted.

At least three of the largest drug benefit managers, Medco Health Solutions, AdvancePCS, and Express Scripts, have special deals with drug manufacturers that require them to create financial incentives for Medicaid recipients to use certain prescription drugs, many of them quite expensive.

By managing their drug benefit programs themselves, the states intend to keep any drug company payments for themselves. They plan to use medical experts to help them determine the most cost effective and appropriate drugs to offer, often supplanting the ones promoted most heavily by drug makers.

The states also plan to ask their attorneys general to review the fine print on their existing prescription drug contracts to make sure that programs for low-income and uninsured residents receive the full benefit of price discounts already negotiated with drug makers.

State consumer fraud and antitrust investigators in New York, Connecticut, Maine and several other states are already examining existing state contracts with Medco, AdvancePCS, Express Scripts and other pharmacy benefit management companies that provide drug benefits for 200 million Americans.

The new drug benefit manager will compete with private pharmacy benefit managers, all of them creating lists of drugs at attractive prices. That way, the states sponsoring the new organization will have a choice of lists of preferred drugs at discounted prices, said Mr. Shumlin of the National Legislative Association.

Other states have created programs to try to rein in their prescription drug costs. Michigan has tried to use the federal Medicaid law as leverage to force drug manufacturers and wholesalers to sell their products in the state at discounted prices. Maine offered Medicaid program discounts to people who did not qualify for Medicaid, and Florida obtained extra rebates from manufacturers. Drug companies have challenged the plans in court, with varying results.

Some states, including New York, have never had a preferred drug list for Medicare recipients. Richard N. Gottfried, chairman of the New York State Assembly health committee and a member of the legislative association planning group for the new drug plan manager, said the state could generate "enormous savings" by selecting a list of preferred drugs and obtaining discounts for Medicaid and other health care programs for women and children.

The organizers say the new nonprofit plan would include coverage for mail-order prescriptions and for importing drugs from Canada, where the government keeps prices low. American drug manufacturers and a New York state pharmacy group have objected to previous state efforts to import prescription drugs from Canada. GlaxoSmithKline warned on Friday that it would stop supplying drugs to Canadian enterprises that ship them to the United States.

Bruce Lott, a spokesman for the Pharmaceutical Research and Manufacturers of America, a trade group, said his group opposed any program that would buy drugs for a pool that included both Medicaid and non-Medicaid plan members like state employees. "The Medicaid program already receives the manufacturers' best price, and the Medicaid program and Medicaid patients would not benefit from inclusion in such a pool," he said.

The Heinz Family Philanthropies, a charitable group, is paying for planning for the nine-state plan. Jeffrey Lewis, executive director of the foundation, said the states hoped to farm out most of the operations, like processing payment claims and selecting networks of pharmacies.

Cheryl Rivers, executive director of the National Legislative Association, said the new organization would develop its preferred drug list itself to guard against undisclosed behind-the-scenes arrangements that could benefit drug manufacturers.

She said the mere existence of the new plan would lead to better pricing from commercial pharmacy benefit managers. "We are already starting to see some of that," she said.

The big pharmacy benefit managers said they would welcome new competition. "We always look forward to competing," said Steve Littlejohn, a spokesman for Express Scripts. The states "can make informed decisions in selecting the plan that makes most sense for them."

Dale Thomas, a spokesman for Advance, said, "AdvancePCS views any efforts to organize a coalition using the tools of the P.B.M. model as yet another validation of the industry's success."

[The Hunter of Jahanna]

THis explains a lot. I have a problem with one of my ankles caused by a car accident and I have to take anti-inflamatories for it. When I go to the doctor provided by the insurance settelment he keeps trying to shove Celebrex and Bextra down my throat even though I have already tried both and neither work.Now I only go to him for Cortizone shots and to drain out the fluid build up. Anything else to do with it is taken care of by the VA Hospital.THe doctors there actualy found a medicine to work on the inflamation.

[Timber Loftis]

Yep. He's gotta push drugs for his suppliers so he can get tha kickback, man. [img]graemlins/bonghit.gif[/img]

[img]graemlins/1puke.gif[/img]

[ElricMorlockin]

Heh the ABA is in the midst of things I see.... go figure.
While I agree that drugs are getting more and more expensive, why is it that the ABA is never called to task in such articles etc? The price of doing any business these days always has to include ones legal fees. We all want a miracle pill to cure every ailment under the sun, and of course, the right to sue the hell out of the manufacturer when it doesnt quite work for us. THAT is the problem with the price of drugs, medical treatment and insurance premiums these days. If we all want less expensive medical treatment, step one IMO should be Tort reform. Doing it any other way is putting the cart before the horse, or in essence it will not accomplish one damned thing.
From a previous conversation Timber you let me know that you're a teacher. I also do not at all like the fact(s) of how easy is to merely sue a teacher and or school district every time someones feelings might have taken a slight bruise. This same mentality, like that occuring in the medical field, is ruining public education in this country. Public education has enough on its plate already, dealing with kids devoid of parental guidance, w/o having to be worried about getting sued, because Suzy doesnt get to come to school with green hair or Billy cant have his nose, eye brows, lips and cheeks pierced and inter-attached with gold chains.

Tort reform first and then lets see how things go. If in fact the price of doing business in this aspect is reduced and we are then gouged for goods and or services, then perhaps we can look at legislation to regulate "x" industry IMO.

Call me cynical but, this just sounds like another attempt by government to regulate prices wich in the past has not worked too well. The Big tobacco settlements saw billions of dollars turned over to staes....which never spent the money on what it was supposed to be used for in the first place.......what a mess.

[ 01-14-2003, 01:04 PM: Message edited by: MagiK ]

Uh-Oh...he said Tort reform....::looks around for TL and ducks::: (ps, I think some tort reform would be a good thing)

[Timber Loftis]

Nice thoughts Elric, but pretty wrong across the board. On a previous post I let you know that teachers took offense to something you wrote - and that I had been on the receiving end of such ire before. I, however, am an attorney.

Tort reform is the silliest dumbass Republican notion in history. The only thing that keeps big nasty companies from negligently killing people all the time is the fear of big verdicts. When Ford lost the Pinto case, the smoking gun was an in-house memo comparing the likelihood of the KNOWN problem (i.e. hit in back, go boom) occurring vs. the likely plaintiff's verdict. When Ford did the Profit vs. Liability comparrison, it decided it could afford up to 100 deaths per year and still turn a profit.

That calculus would still prevail if it wasn't for Punitive Damages. "Pain and suffering" = compensate YOU for your injuries. Punitive = hit the wrongdoer SO HARD he won't think about calculating human life vs. money ever again. Thus, the jury in the Ford case said "Well, let's make sure we give them higher numbers than they calculated so we prove them wrong."

This story is repeated ad nauseum: Dalkon Shield, Phen-fen, asbestos products, etc. - the only thing that makes the wrongdoer stop is making the wrongdoer pay for MORE than they think one measley human life is worth.

Similarly, the money was not awarded in the infamous McDonald's case to Compensate the victim - rather to Punish the wrongdoer (who still makes their coffee to damned hot and now simply puts a warning label on it - all just to keep you from getting your free refill worth $.01).

Among those who know what tort reform means, it is only supported by those who have BigCorp lining their pockets.

Now, I'm NOT picking on Doctors. Trust me, as a fellow professional who also has to pay through the nose for malpractice insurance, I sympathize. Plus, like lawyers, doctors have incredibly rigorous standards to meet inside the profession itself and are often called to the carpet by their peers regarding their actions. I feel there are a fair amount of safeguards against medical malpractice - even though some of the laws are finigly.

But, the big companies producing the drugs, medical products, and insurance services are EVIL. EVIL, I say. Price-fixing, bullying competitors, basically bribing doctors, denying coverage to people who pay insurance premiums - all with no real recourse by the public.

Did you know they have colluded (lobbied) to make it illegal for you to go to Canada and buy the exact same drugs that are made and sold in the US - shipped there by the exact same company with the exact same labelling? Why? Because the drug is less safe? HELL NO. Because it's cheaper.

This is quite a long-ish [img]graemlins/rant.gif[/img] and for that I apologize, but folks simply don't read up on this enough.

[Timber Loftis]

Originally posted by MagiK: Uh-Oh...he said Tort reform....::looks around for TL and ducks::: (ps, I think some tort reform would be a good thing)

Only because you don't know what it means. What it means is barring folks from recovery for real injuries in the name of profits for fat cats. See my post above.

On the same note that this was written on, I think it's time for me to hide from Attalus. :ducks: [img]graemlins/hidesbehindsofa.gif[/img]

[Timber Loftis]

One more note on TORT REFORM:

There is tort reform I would support. It's very simple.
1. Allow punitive damages - the wrongdoer needs to be punished.

2. But, don't give the excess gobs of $$$ to the plaintiff, who was not hurt in *that* amount. Instead, funnel punitive damages into social welfare programs, providing free legal services for those who can't afford to pursue their own claims (and there are LOTS, believe me) or simply reduce everyone's tax burden. (Note: the only reason this currently is not ascribed to is a hundreds-of-years-old common law legal tradition that *only* the parties in a lawsuit can be given money.)

[edited in after a later post:]
3. As an addendum, I should note that the lawyer's fees should only come from the non-punitive portions or should be decreased for that portion of the recovery -- thereby reducing the incentive to sue that we are currently faced with. I agree that I don't want to see the lawyers making such silly gobs of money.
[end edited portion]

Thus, we get to PUNISH the wrongdoer, without suffering the annoying WINDFALL that the plaintiff sometimes gets.

This is what I would consider good tort reform. But, what the Repugs in DC advocate is simply capping damage amounts. I should too, you know, as it would be *much* better for my environmental clients. But, on this board, I can speak for what's right - not what lines my pockets.

[ 01-14-2003, 02:29 PM: Message edited by: Timber Loftis ]

[ElricMorlockin]

Originally posted by Timber Loftis: Nice thoughts Elric, but pretty wrong across the board. On a previous post I let you know that teachers took offense to something you wrote - and that I had been on the receiving end of such ire before. I, however, am an attorney.

Oh good! Thats even better.

Tort reform is the silliest dumbass Republican notion in history.

So if I am an Independent, does that make me a dumbass still? I dont buy any of the horsesh*t put out by either party, thank you very much. But I do see cause and effect Timber.

The only thing that keeps big nasty companies from negligently killing people all the time is the fear of big verdicts.

Pure propoganda, no offense but in my scenario, you would in fact be the fox in the hen house. I own a couple of companies, and the safety and well being of my employees comes first. You see Timber, THEY are my biggest assets and I always protect my assets. I dont do it out of fear of being sued, I do it because its what makes my companies' work.

When Ford lost the Pinto case, the smoking gun was an in-house memo comparing the likelihood of the KNOWN problem (i.e. hit in back, go boom) occurring vs. the likely plaintiff's verdict. When Ford did the Profit vs. Liability comparrison, it decided it could afford up to 100 deaths per year and still turn a profit. That calculus would still prevail if it wasn't for Punitive Damages. "Pain and suffering" = compensate YOU for your injuries. Punitive = hit the wrongdoer SO HARD he won't think about calculating human life vs. money ever again. Thus, the jury in the Ford case said "Well, let's make sure we give them higher numbers than they calculated so we prove them wrong."

OK, here is MY point Timber. For every case like this you can point out, there are THOUSANDS that you know, and I know, dont even have .00000001% of the justification/merit that something like this does. Not every instance, in every lawsuit is there a memo pointing out so heinously the cost of human life. The word negligence is thrown around as loosely these days, as love, Nazi, Hitler etc.

This story is repeated ad nauseum: Dalkon Shield, Phen-fen, asbestos products, etc. - the only thing that makes the wrongdoer stop is making the wrongdoer pay for MORE than they think one measley human life is worth. Similarly, the money was not awarded in the infamous McDonald's case to Compensate the victim - rather to Punish the wrongdoer (who still makes their coffee to damned hot and now simply puts a warning label on it - all just to keep you from getting your free refill worth $.01).

Suppostion. I drink alot of coffee and happen to like mine hot. I also know that spills can occur and I should take caution with a toss away cup and lid. McDonalds "crime" was to make coffee very hot, so it was still at least somewhat hot ten minute down the road. To assume or assert that they made their coffee to purposely injure their clients makes absolutely NO SENSE AT ALL.
Also, if I go to a fast food drive in window, the last thing on my mind is, "well after I get to the office and polish off this cup, I think I'll go run back and get my refill".

Among those who know what tort reform means, it is only supported by those who have BigCorp lining their pockets.

WWWWWWRRRRRONG. Its small business owners who get the shaft from every conceivable direction possible. My cost of doing business would be substantially less if I didnt have to carry MILLIONS of dollars in liablity insurance on all of my employees. That money comes from making a profit, and that same money doesnt make it into payroll, bonus', retirement accounts or profit sharing. BTW... there arent any BigCorps lining my pockets either, yet another misnomer.

Now, I'm NOT picking on Doctors. Trust me, as a fellow professional who also has to pay through the nose for malpractice insurance, I sympathize. Plus, like lawyers, doctors have incredibly rigorous standards to meet inside the profession itself and are often called to the carpet by their peers regarding their actions. I feel there are a fair amount of safeguards against medical malpractice - even though some of the laws are finigly.

Well, being that you chose to show your hand, I can ... I guess, assume that you are a Democrat. No big deal to me really, but lets get to the chase of what your party really wants. That is, state controlled health care. You folks are doing a fine job of forcing alot of doctors out of their industries because they cannot afford the insurance. If the goal was control, keep at it, none of us will have usable health coverage in the near future, for lack of good doctors willing to provide it. Because of rampant law suits one cannot even get a video of their baby in the womb, when the Mrs is in for a sonogram (sp?). I've been there and done that, not even two months ago. Is this the kind of progress that is good?

But, the big companies producing the drugs, medical products, and insurance services are EVIL.

Evil? Are you being serious here?

EVIL, I say.

It appears you are!

Price-fixing, bullying competitors, basically bribing doctors, denying coverage to people who pay insurance premiums - all with no real recourse by the public. Did you know they have colluded (lobbied) to make it illegal for you to go to Canada and buy the exact same drugs that are made and sold in the US - shipped there by the exact same company with the exact same labelling? Why? Because the drug is less safe? HELL NO. Because it's cheaper.

Many of our products shipped over seas are cheaper to buy there. For starters there isnt anywhere near the regulation and subsequent government offices to run and monitor it, which naturally decreases cost. Each step in the distribution process also adds cost (companies are in business to make money after all), but they are also put under the auspices of......... You guessed it! MORE regulation (aka. tax). So, where exactly is the cut-off point for being taxed on a given product? Fifteen times? Twenty?
In fact Timber, I invested specifically into a company which makes stickers, which are mainly found on things like lawnmowers etc (Do NOT use this lawnmower to trim your hedges). When you buy a ladder these days, there are more stickers than ladder, its quite sickening.

This is quite a long-ish [img]graemlins/rant.gif[/img] and for that I apologize, but folks simply don't read up on this enough.

Not at all! Its good to hear two sides to any story isnt it? One thing however, I would like to add, so as to eliminate it completely from any discussion on the matter. Tort reform doesnt mean getting rid of lawyers, as you know. We need attorneys' especially good ones. But you know as well as I do, all about quite a bit of nonsense that goes on in this area of law. Inmates suing prison systems because the prison they are incarcerated in is 250 miles from a fault line etc. This type of nonsense is incorporated into the expense of everything we buy and every service our taxes pay for.