October 24th, 2006

Brad @ Burning Man

The PPA and Reinventing the Wheel

I'm seeing almost as many ads featuring talk show host Montel Williams for the Partnership for Prescription Assistance as I'm seeing campaign ads. Given that we're two weeks from a major mid-term election where the Republicans are trying to spend themselves out of a hole by spending almost unprecedented amounts of money on mudslinging and sexual innuendo, that's saying something. The PPA "orange bus" ads have done a masterful job ... of reminding me to come back to the subject, over and over again, while I clarified my thinking on the subject. You see, while I was waiting for my disability ruling, I had my own brief and unsuccessful contact with the PPA. That they never got my paperwork processed in time to do me any good wasn't the interesting part to me. I start out with low expectations for these kinds of public/private partnership bureaucracies, so that was no surprise. The interesting part to me was that somehow something about this felt weirdly familiar to me. But I never fully worked it out, so I put it out of my mind as uninteresting and unimportant ... until their ads kept making me think about it long enough to put the pieces together. Thanks Montel!

The PPA is all about the politics of Medicare prescription drug coverage, so let me recap that really quickly again. When Medicare, the government program that provides free and/or deeply subsidized medical services to Americans too old to be still covered by an employer's health plan or too crippled to work, was set up it didn't provide prescription drug coverage for the same reason that it didn't provide coverage for, oh, say, Band-Aids or Kleenex. There just plain weren't very many drugs, because the science of understanding how chemicals interact with our cell structure hadn't been worked out yet. The few drugs that existed had been refined from or modified from known natural healing substances, plus killed-virus or viral-particle vaccines. Many of those drugs had been researched by government grants, by the military, by university researchers who put them in the public domain because they had no way to profit from them, and so forth; the ones that were known that had been developed by corporations had been invented so long ago that the patents had all run out. So what few medicines doctors had to prescribe at the time were cheaper than soda pop, and just as ubiquitous. But then came the relatively recent Nobel Prize winning discoveries of receptor-site chemistry and molecular modeling software, and companies embarked on a gold rush that was eerily reminiscent of the alchemy boom after the discovery of fractional distillation at the end of the Renaissance. Now we have tons of very expensive new medicines, which are able to cure diseases long thought incurable, all covered by patents that are worth billions. So you better bet that the companies that own those patents have every intention of deploying however many lobbyists, lawyers, and only semi-honest chemists to protect those patents at all costs, so they can continue the transfer of vast sums of wealth from every sick person in the world to the handful of people who make up the senior management of and the major stockholders in those companies ... oh, and to your retirement fund.

So while we could continue to provide the medical services originally covered in Medicare indefinitely and for next to nothing or even free, the sad fact is that those medical services will only cure or treat about a quarter or a third or so of the reasons why anybody would go to a doctor's office. Everything else requires seriously, seriously expensive medication, and retirees no longer on their company's health plan and people too crippled to work were being bled dry and then thrown out into the cold to die once their prescription costs literally ate them out of house and home. Perfectly sympathetic people who'd worked their whole lives and done everything that society had ever asked them to do were having to choose which bills to pay: the mortgage or rent payment that was keeping them from being homeless, the grocery bill that was keeping them from starving, the electric bill that was keeping them from freezing to death or suffocating in the heat, or the prescription drug bill that was keeping whatever disease they had at bay. And when enough perfectly sympathetic people have a problem that dire, society will sooner or later notice enough of the most mediagenic of them, and once it does, politicians have to respond. The response, passed by the Republican Congress and signed by President Bush, was Medicare part D, also known as the Medicare Prescription Bill. It's an insanely complicated mess, but that problem's not the reason that the PPA was formed.

When Medicare part D was being negotiated, it seemed intuitively obvious to Democrats, both because of their few remaining emotional and practical connections to the working class and because (as the party out of power) they were receiving fewer pharmaceutical industry campaign donations, that of course Medicare, if it were going to be buying prescription drugs in vast quantities, would do the same thing that every other prescription drug plan with similar leverage does: negotiate a hard bargain with the manufacturers to get the best possible price. Those pharmaceutical companies, who desperately need not the lowest possible prices but the highest possible prices if they're to continue to pay for very expensive patent litigation, very expensive lobbying of whichever party is in power, very expensive chemical research into producing functionally identical molecules that are just different enough to merit patent extension (the reason why one of the two working chemists I know got out of pharmaceuticals and into materials science was that they wouldn't let him work on anything new while there were valuable lapsing patents to replace), very expensive ad campaigns to trick the public into thinking that the new patented version is actually better than the old now-generic version, very expensive shareholder dividends, very expensive CEO salaries -- and oh yeah, some pittance thrown at researching new cures for still-uncured diseases -- screamed bloody murder at the thought of having to seriously negotiate with yet another large aggregate purchaser, this one backed by the taxpayers. So they ran tons of expensive ads paid for out of your pharmacy expenses, and made lavish donations to senators like Jim Talent paid for out of your pharmacy expenses, to make sure that this didn't happen. As a result, Medicare part D is practically the only buyer on the planet paying the fictional "full list price" for drugs. This decision, even more than the obscene complexity of the program, is at the heart of the still-ongoing political debate between the two parties going into this November 7th's election.

But to get to the relevant bit, part of the pharmaceutical companies' huge publicity campaign at the time, to buy off centrist Democrats' consciences and stave off political demand by the public for more affordable prescriptions, was the formation of the Partnership for Prescription Assistance. The PPA partners with local charities across the country. Those charities handle all the paperwork for them, and provide them with a deniable cut-out to turn down claims from people that the PPA's pharmaceutical company backers think really could afford to pay full price for their drugs if they only took out a 3rd mortgage or something. Then the manufacturers provide somewhat discounted, or occasionally steeply discounted, or once in a very very very rare while actually free drugs to those local charities to disburse to the people who make it through the bureaucratic maze with the necessary paperwork in hand to prove, eventually, that no, they really don't have any more money left to spend on staying alive. It's based on a simple, and even somewhat morally defensible proposition. If, in fact, the only research being done to find new cures is being paid for out of pharmaceutical profits, then the only moral system is one in which we use something rather like sliding-scale pricing. If you can't afford to pay anything and you're sympathetic and mediagenic, the taxpayers should pay for you. If you can afford to pay the minimum cost of manufacturing the chemicals and shipping them to you, typically pennies on the dollar out of any prescription cost, but can't afford to pay a penny more towards the research, you should get those drugs at manufacturing and shipping cost. If you can afford to pay a little more because your job has a minimal-coverage insurance plan, your insurance plan should pay more. If you have gold-plated CEO-level insurance and cost is no option, you should pay a lot.

And then, just the other day, I realized where I'd seen this logic before. We already have such a system. It's called the graduated income tax. The PPA's eligibility program is just another attempt to reinvent the whole graduated income tax system all over from scratch, something that's taken us 140 years to get to the current still-flawed and still-debated system for allocating costs that all of society needs to get covered based on who can afford to pay more. And I don't think that anybody involved, neither the mercenary CEOs who created the PPA nor any well-meaning bureaucrats working inside the PPA nor even, probably, the well-meaning volunteers and underpaid staffers for the local cut-out charities that process people for the PPA, realizes this yet. They certainly haven't copied any of the more sophisticated measures we use in the tax system, like the Earned Income Tax Credit and the various middle-class tax deductions, to help calculate need. Will it take them 150 years or more to get it right? Can we stand still that long if it does? Or should we take advantage of the fact that we already have a graduated income tax system, and use money raised through it to fund pharmaceutical research into new cures without all that overhead for advertising, lobbying, litigation, CEO salaries, and patent law exploitation?
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