[Apologetics] Pfizer Wins, While CVS Loses, as Senate Weighs Obama Health Plan

[Art Kelly]

As you may know, the drug industry has completely sold out to the liberals.  
 
The Pharmaceutical Research and Manufacturers of America (PhRMA) is helping the Left outspend the opponents of Obamacare by a 3-to-1 margin.  See http://www.my60secondscoops.com/publications/id.182/pub_detail.asp
 
That is probably why public support for government-run health care has increased in the latest polls.
 
Art
 
http://news.yahoo.com/s/bloomberg/20091006/pl_bloomberg/art21rgbyvra

Pfizer Wins While CVS Loses as Senate Weighs Obama Health Plan

Kristin Jensen and Pat Wechsler Tue Oct 6, 12:01 am ET

Oct. 6 (Bloomberg) -- Drugmakers, hospitals and clinical laboratories are the winners in the newest version of a plan to expand Americans’ access to health care that’s set for a battle among Democrats in the U.S. Senate. 

The Senate Finance Committee intends to vote this week on the legislation after becoming the last of five congressional panels to finish drafting a measure. Leaders in the Democratic- controlled Senate must then try to combine that version with one the health committee approved in July. 

Pfizer Inc., the world’s largest drugmaker, and hospital companies including Community Health Systems Inc. are benefiting from agreements with President Barack Obama that will limit any threat to their profits. Insurers such as WellPoint Inc. beat back an effort to create a government-run insurance plan, though they lost ground when the finance panel scaled back penalties for not having insurance. Industries such as medical device makers have to shoulder new fees. 

“They all have to pay out something,” said Les Funtleyder, a health-care analyst at Miller Tabak & Co. in New York. “But everybody has gotten a lot more out of this thing than the expectations going in, which were very negative.” 

Unsettled Issues 

The legislation drafted by the finance panel on Oct. 2 aims to cover millions of the uninsured and curb health-care costs. A number of questions are unsettled, including whether to create the government program to compete with private insurers. The panel decided against the “public optionâ€

House leaders must work to combine the various versions of the legislation, and votes must be scheduled in each chamber. If the House and Senate pass measures, the bills would have to be merged during conference meetings before another round of votes. 

While the Senate Finance Committee had intended to vote as early as today, it will wait another day or two to give the Congressional Budget Office time to complete an analysis of the measure’s costs, said Scott Mulhauser, a committee spokesman. 

Here are the potential industry winners and losers so far: 

Potential Winners 

DRUGMAKERS: New York-based Pfizer and other pharmaceutical companies overcame attempts to torpedo a deal they made with Finance Committee Chairman Max Baucus and Obama that limits their contribution to the overhaul to $80 billion over 10 years. Baucus joined with all the panel’s Republicans and Democrats Robert Menendez of New Jersey and Thomas Carper of Delaware to uphold the agreement with the drug companies. London-based AstraZeneca Plc has its U.S. headquarters in Delaware, while Menendez represents Whitehouse Station, New Jersey-based Merck & Co., among other companies. 

The issue may still come up on the floor because some senators want the industry to contribute more to cut costs and raise revenue. If the pharmaceutical makers can keep the deal in place, they’ll come out ahead in the debate, analysts said. 

“If you look at drug spending over the next 10 years, it will be something like $4 trillion,” said Uwe Reinhardt, a Princeton University economist who specializes in health care. “Well, $80 billion out of $4 trillion; what a bargain.” 

LABORATORIES: Quest Diagnostics Inc., Laboratory Corp. of America Holdings and Celera Corp. escaped $700 million in annual industry fees proposed by Baucus. Before the committee began work, the Montana Democrat shifted that assessment to health insurers, bringing the total fees to $6.7 billion for an industry led by Minnetonka, Minnesota-based UnitedHealth Group Inc. and Indianapolis-based WellPoint. 

Madison, New Jersey-based Quest, Burlington, North Carolina-based LabCorp and Alameda, California-based Celera would also benefit from provisions in all of the committees that encourage greater use of disease screening. And increased preventive care may boost providers as a whole. 

Newly covered people “will be hungry for health care, and in the medium- and long-term this will be a win for the entire industry,” said John Sullivan, director of research and a health-care strategist at Leerink Swann & Co. in Boston. 

HOSPITALS: Community Health Systems of Franklin, Tennessee, Nashville, Tennessee-based HCA Inc. and hospitals across the nation may end up winners after a deal in which they pledged $155 billion in cost savings largely survived. As part of that agreement, payments for taking care of charity cases would be reduced only if certain insurance coverage levels are met, insulating hospitals, said Paul Heldman, senior health-policy analyst at the Potomac Research Group in Washington. 

One area of worry for hospitals has been Baucus’s proposal to set up an independent panel to advise on Medicare rates, potentially lowering payments to health-care providers. 

“If it becomes a bureaucratic organization that is insulated from the everyday practice of health care, it will not achieve its promise as a health-care innovator driving payment reform, but rather, become a cost-cutting tool,” said Ralph de la Torre, chief executive officer of Boston-based Caritas Christi Health Care, New England’s second-largest hospital network. 

Still, the commission so far doesn’t look too threatening, Heldman said. Hospitals “come out net winners,” he said. 

Potential Losers 

PHARMACY BENEFIT MANAGERS: Under a Senate finance panel provision, pharmacy benefit managers such as Woonsocket, Rhode Island-based CVS Caremark Corp. and Medco Health Solutions Inc. of Franklin Lakes, New Jersey, would have to disclose rebates from drugmakers if they participate in Medicare’s prescription- drug program or in new health-insurance exchanges. The managers act as middlemen between insurers, pharmacies and drugmakers. 

Unions, consumer-advocacy organizations and independent pharmacists have alleged that benefit managers pocket much of the rebates they receive from drug manufacturers and retail pharmacies instead of passing them on to insurers and consumers. The provision is “unfriendly” to benefit managers, though the dollar impact “is unknown because we don’t know how big the rebates are,” Funtleyder said. 

DEVICE MAKERS: The medical-device industry, which includes companies such as Minneapolis-based Medtronic Inc. and Natick, Massachusetts-based Boston Scientific Corp., would be forced to pay $4 billion in annual fees, based on market share, starting in 2010 under Baucus’s plan. The industry will keep trying to fight those fees as the legislative process goes forward. 

Senators and governors from states where device makers are based, including Senators Amy Klobuchar and Al Franken, Democrats from Minnesota; Republican Senator Richard Lugar from Indiana; and California Governor Arnold Schwarzenegger, have lobbied for a reduction in the levy. 

JPMorgan Chase & Co. analyst Michael Weinstein said on Sept. 23 the industry was in talks to reduce its fee to below 2 percent of its U.S. sales of $120 billion. Neither the industry trade group, Advanced Medical Technology Association, nor the Senate Finance Committee would confirm such talks. 

Mixed Picture 

INSURERS: Baucus’s panel scaled back fines for people who fail to buy insurance. It cut the top penalty for failing to comply with an individual insurance mandate to $750 per adult, from $1,900 per family. It also waived the penalties in 2013, the first year that federally backed health-insurance exchanges would be in place, phasing them in through 2017. 

The industry has already agreed to changes such as accepting any new client regardless of a preexisting condition, and new programs to encourage preventive care. Insurers such as UnitedHealth and WellPoint are depending on the mandate to buy insurance to give them a new crop of healthier clients to make up for the extra costs. Lower penalties might hurt them. 

“They’re going to get more expensive patients, and they’re not going to be able to spread the cost of those patients over a broader mix of people,” Heldman said. 

The panel passed an amendment from Senator Maria Cantwell, a Washington Democrat, that would allow states to get federal funds to negotiate and buy insurance for lower-income people. That may pose a threat to Medicaid managed-care companies such as St. Louis-based Centene Corp., Funtleyder said. 

Still, insurers also won a critical victory earlier in the week when Baucus’s panel voted down a proposal to create the government-run insurance program. The idea is still alive in the House and in the Senate health committee’s proposal. 

“The public plan was always the nuclear scenario for managed care,” Sullivan said. “Without it, the changes are all something the industry can learn to live with.” 

BIOTECH COMPANIES: Thousand Oaks, California-based Amgen Inc. and rivals such as Cambridge, Massachusetts-based Biogen Idec Inc. so far have held off many of the most profit- threatening provisions. 

An amendment from New York Senator Charles Schumer on biotechnology drugs, which are made from living organisms, essentially created “an even playing field,” Heldman said. While the amendment was designed to encourage greater use of generics, it would result in doctors getting paid at the average price of the copycat drug plus 6 percent of the brand-name product, not as great an incentive as it might have been, Heldman said. “You get the higher markup regardless of which drug you use,” Heldman said. 

At the same time, one Senate committee and another in the House would give biotech drugs 12 years of protection from generic competition, less than the seven years of exclusivity sought by the White House as a way of bringing prices down. Those measures also create a pathway for approval of the first generic biologics. 

Makers of generic drugs such as Lake Forest, Illinois- based Hospira Inc. are looking for changes that would tighten the rules and not allow biotech companies to get another 12 years of exclusivity for slight changes to their medicines. Hospira CEO Christopher Begley said greater use of generic biologics would cut costs by 30 percent. 

“Big biotech has suffered because investors have been so nervous during this debate,” said Leerink Swann’s Sullivan. “A resolution of the bill will make a big difference since investors can assess if there has been any real damage.” 

To contact the reporters on this story: Kristin Jensen in Washington at kjensen at bloomberg.net ; Pat Wechsler in New York at pwechsler at bloomberg.net




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