Waxman Hearings: Big Pharma’s Institutionalized Kickback Racket

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Witnesses before Congressman Waxman’s House oversight committee this morning said regulating drugs is literally impossible because nobody knows what they cost to make.

Steven Schondelmeyer of the University of Minnesota said the pharmaceutical industry insists its products make up a relatively small part of the health care budget. Yet, he pointed out, “half of all working adults and three quarters of elderly use one prescription every week… the drug industry accounts for 4 percent of the nation’s overall economy and18-19 percent of the health care dollar.”

“Let’s quit minimizing drugs,” said Shondelmeyer. “This is an institutionalized case of kickback.”

Different government agencies pay different prices for the same drugs. “There is no way of knowing whether and how the market works,” said Gerard Anderson, a Johns Hopkins professor who has tracked the pharmaceutical industry. “Some states pay five times more than other states.”

At the same time, it is pretty well established that Medicare Part D plans (covering Medicare recipients) are paying 20 percent more than the government pays for Medicaid recipients. At the same time, the federal and state governments are pushing people off Medicaid into Medicare where they end up paying higher prices.

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