In Obama gives powerful drug lobby a seat at healthcare table, the L. A. Times reports that:
The pharmaceutical industry, once condemned by the president as a source of healthcare problems, has become a White House partner.
By Tom Hamburger August 4, 2009
Reporting from Washington -- As a candidate for president, Barack Obama lambasted drug companies and the influence they wield in Washington. He even ran a television ad targeting the industry's chief lobbyist, former Louisiana congressman Billy Tauzin, and the role Tauzin played in preventing Medicare from negotiating for lower drug prices.
Since the election, Tauzin has morphed into the president's partner. He has been invited to the White House a half-dozen times in recent months. There, he says, he eventually secured an agreement that the administration wouldn't try to overturn the very Medicare drug policy Obama criticized on the campaign trail. . .
Please read it all. It's a shocker. Big Pharma is the most sanctimonious of all the greedy industries out there. Meanwhile they enjoy about 98% gross margins. (That's not a typo.)
From a political standpoint, I'm beginning to wonder just who Barack Obama thinks is his base. Bill Clinton tacked to the center only after his party was thrashed in his first midterm election. Why is this President, with a filibuster-proof majority in the Senate, so cozy with Big Pharma?
Copyright (C) Long Lake LLC 2009
Showing posts with label Bill Clinton. Show all posts
Showing posts with label Bill Clinton. Show all posts
Tuesday, August 4, 2009
Wednesday, June 3, 2009
Food For Thought
From a mass Email today from David Kotok of Cumberland Advisors, traveling in Zimbabwe. Dr. Kotok appears to be a reasonable, middle-of-the-road sort of guy. Food for thought:
At dinner we discussed how regimes alter policy and how Zimbabwe is the extreme example of a sequence that was summarized by LSU professor Joe Mason as political change leading to socialization and industrial policy followed by inflation, as the government dominates or controls the financial engine. In Zim's case, Joe noted that the politics were those of “a "ruthless dictatorship.” The target of the industrial policy in Zim is agriculture, and property seizure, corrupted courts, and painfully inflicted police power have also been characteristics of this regime change.
That led us to a discussion of the present evolution underway in the United States. We do see major political change in the massive repudiation of the Bush Administration and with the now overwhelming majority in the House and the Senate of a single party that also includes the president. Add only one or two Democrat senators, and the US will be operating under a full one-party rule.
There is a trend toward growing socialization, which will accelerate when the proposed Obama tax structure becomes law. By then, less than half the wage earners in America will be paying income taxes; hence, the funding of government will fall on the minority.
We already see an industrial policy in banking. And we have one in housing finance now that most residential mortgage lending is done by government agencies. We are also evolving an industrial policy with autos. We've had one in agriculture for years; federally subsidized ethanol policy was one of the worst results.
Will this lead to inflation? Our central bank claims vigilance while expanding its balance sheet in ways without precedent. Clearly markets see an inflation risk and are raising interest rates. Foreigners worry about the US dollar and evidence their views in the foreign-exchange market. The jury is still out on an eventual large inflation while the US economy remains in recession, but one must certainly admit that the inflation risk is high. The political influence on the central bank by our Congress doesn’t lessen this longer-term inflation fear.
Some political history. The last three times the U. S. had this sort of one-party rule were first under FDR. Coming into the utter devastation of the end of the Great Crash, he brought some inflation and initially soaring stock prices, but ultimately unemployment never declined a lot or consistently. Carter had 4 years of one-party rule. The first two years had very poor stock markets and the second two years had soaring inflation and in year 4, a dollar crisis. Clinton, in a time of the strong Perot balanced-budget movement, had only two years of one-party rule, got none of his agenda through (think quasi-socialized medicine); when he and the Party were repudiated, the great Bull (-sh*t) market of the second half of the '90s got going. We are still enduring the hangover from that and the associated ascendancy of Big Finance that suited both Clinton's and Gingrich's purposes.
While the above data is necessarily of statistically poor power, I believe that it should be kept in mind in interpreting the markets.
Big Government is bigger than Big Finance.
Copyright (C) Long Lake LLC 2009
At dinner we discussed how regimes alter policy and how Zimbabwe is the extreme example of a sequence that was summarized by LSU professor Joe Mason as political change leading to socialization and industrial policy followed by inflation, as the government dominates or controls the financial engine. In Zim's case, Joe noted that the politics were those of “a "ruthless dictatorship.” The target of the industrial policy in Zim is agriculture, and property seizure, corrupted courts, and painfully inflicted police power have also been characteristics of this regime change.
That led us to a discussion of the present evolution underway in the United States. We do see major political change in the massive repudiation of the Bush Administration and with the now overwhelming majority in the House and the Senate of a single party that also includes the president. Add only one or two Democrat senators, and the US will be operating under a full one-party rule.
There is a trend toward growing socialization, which will accelerate when the proposed Obama tax structure becomes law. By then, less than half the wage earners in America will be paying income taxes; hence, the funding of government will fall on the minority.
We already see an industrial policy in banking. And we have one in housing finance now that most residential mortgage lending is done by government agencies. We are also evolving an industrial policy with autos. We've had one in agriculture for years; federally subsidized ethanol policy was one of the worst results.
Will this lead to inflation? Our central bank claims vigilance while expanding its balance sheet in ways without precedent. Clearly markets see an inflation risk and are raising interest rates. Foreigners worry about the US dollar and evidence their views in the foreign-exchange market. The jury is still out on an eventual large inflation while the US economy remains in recession, but one must certainly admit that the inflation risk is high. The political influence on the central bank by our Congress doesn’t lessen this longer-term inflation fear.
Some political history. The last three times the U. S. had this sort of one-party rule were first under FDR. Coming into the utter devastation of the end of the Great Crash, he brought some inflation and initially soaring stock prices, but ultimately unemployment never declined a lot or consistently. Carter had 4 years of one-party rule. The first two years had very poor stock markets and the second two years had soaring inflation and in year 4, a dollar crisis. Clinton, in a time of the strong Perot balanced-budget movement, had only two years of one-party rule, got none of his agenda through (think quasi-socialized medicine); when he and the Party were repudiated, the great Bull (-sh*t) market of the second half of the '90s got going. We are still enduring the hangover from that and the associated ascendancy of Big Finance that suited both Clinton's and Gingrich's purposes.
While the above data is necessarily of statistically poor power, I believe that it should be kept in mind in interpreting the markets.
Big Government is bigger than Big Finance.
Copyright (C) Long Lake LLC 2009
Saturday, February 7, 2009
Biotech, Stimulus, and Socializing the Gains
In the first half of the 1990s, I was the physician for a Democratic Congressman. As he was preparing to leave rehab after suffering a stroke, he held a dinner at a local eatery for the head of the hospital and me. In town and invited to join was Charles Rangel, Democrat of New York and a good friend of my patient. Mr. Rangel arrived a bit late for the dinner. Knowing full well the occupations of the other guests, he said hello and while still standing said something like:
"There's going to be socialized medicine- it's just a question of when we can find the $300 b illion or so needed to pay for it."
How quaint that pronouncement seems now that hundreds of billions of expenditures just sort of occur without funding, and trillions of dollars of Fed credit and Federal guarantees just sort of appear! Those were the days when a new president actually raised taxes in 1993 to pay for his prospective 1994 health care legislation.
The above said, from a medical perspective, IMO the current stimulus plan misses an important boat: it should focus more on biotech and related advanced therapeutic technologies.
Medical practice and development of truly important medicines provide the following:
"There's going to be socialized medicine- it's just a question of when we can find the $300 b illion or so needed to pay for it."
How quaint that pronouncement seems now that hundreds of billions of expenditures just sort of occur without funding, and trillions of dollars of Fed credit and Federal guarantees just sort of appear! Those were the days when a new president actually raised taxes in 1993 to pay for his prospective 1994 health care legislation.
The above said, from a medical perspective, IMO the current stimulus plan misses an important boat: it should focus more on biotech and related advanced therapeutic technologies.
Medical practice and development of truly important medicines provide the following:
- Benefits for all of us
- Global leadership in high-margined products
- "Green" technology
- Non-cyclical field
In addition, the National Institutes of Health, FDA, and CDC have global respect that remains unsullied by the mess created by the Citis and Lehmans of the world. In particular, NIH is well-suited to drug development that the public can finance and benefit from.
Unfortunately, the history of the Government and medical research provide a number of examples where the gains are privatized unfairly. Skipping over such history as allowing Bristol-Myers Squibb to reap many billions of dollars of profits from the old molecule metformin, profits that should have accrued largely to the Federal Government, let us consider the current debate over biotech drugs.
A little background: A biotech drug is generally a protein, which is how the term will be used for the rest of this discussion. What we think of as high-tech, modern biotech drugs are the protein-based products of sophisticated cell culture techniques. A seemingly minor variation in manufacturing techniques may produce a seemingly identical protein but have major differences. This was shown several years ago when a J&J version of Amgen's Epogen (erythropoietin) for anemia was marketed in Europe as Eprex and led to a number of cases of aplastic anemia.
Thus, there is no such thing as an exact, reliable "generic" copy of a biotech drug. Now if you or I get cancer, we do not want an approximation of the drug that treats the cancer. However, that approximation has been given a term, "biosimilar", and the following appears to be happening.
The generic companies, which now include Pfizer, want to horn in on the biotech industry. They can't stand it that patent expiration isn't enough to let them in on the riches. In the normal course of events, I believe thatwe are likely to end up with most people being placed on biosimilar biotech drugs to treat critically important medical problems, under the guise of saving money. (One suspects that Congress will grant itself a healthcare plan that provides substantially full coverage for the real deal rather than the biosimilar.)
As a further background, the pharmaceutical business is somewhat special. Successful brands in foods and sneakers, such as Coke and Nike, are typically developed not based on patent protection but on perceived quality, and then can go on and on and keep market share. To do this, they need to be fair on their margins. Brand name drugs have a different model. They typically have gross margins that literally can approach 100%. Even if they lose 95% of their market share when they go generic, they still may generate greater profit than all the generics put together (because the brand company ceases all marketing expense). The biotech industry has much greater cost of goods, greater infrastructure needs, and riskier product development than the traditional drug industry. Of course, biotech companies do know how to charge very, very high prices for their products.
A better policy would be for the biotech industry to be protected from biosimilar competition, for pricing of the brand to be regulated. One can make an estimate of cost savings that biosimilars will generate and work it out so that at no greater net cost to society, we can all enjoy the real product, not the similar one, and at no net increase in cost, or perhaps even at a net saving.
Incidentally, it can also be mandated that all manufacturing and almost all R&D related to the biotech industry occur in the U.S. and its territories. This is technically challenging work, and quality must be maintained 24x7.
Bill Clinton clamped down hard on the over-payments to HMOs that the Republicans favored. Under President Obama, the health of the public can be optimally protected by devising a fair solution to the issues of high biotech costs and biosimilars. Let's socialize the gains for a change.
Copyright (C) Long Lake LLC 2009
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