Pfizer Inc., Amgen Inc. and the rest of the U.S. pharmaceutical industry awoke to a new reality this week: a Congress controlled by Democrats determined to impose costly restrictions on their business.
Five committees are planning investigations into how to lower prices paid by Medicare, improve drug-safety enforcement and make generic medications available faster. Further probes and policy salvos may follow.
The pharmaceutical firms depend on a friendly federal government: A sixth of 2006 growth in the $252 billion U.S. drug market came from Medicare, according to estimates from IMS Health Inc., a Fairfield, Conn.-based research firm. Moreover, both Democrats and the companies are well aware that the industry gave at least two-thirds of its political donations to Republicans in recent elections.
"No one believes the sky is falling, but certainly there are a few more clouds," says Ken Johnson, a senior vice president at the Pharmaceutical Research and Manufacturers of America, the industry's trade group in Washington. "I don't think there's any question that there's some pent-up hostility."
Rep. John Dingell, the Michigan Democrat who will head the House Energy and Commerce Committee, says that "there are a whole lot of questions that have to be addressed, and we will be quite diligent."
As the committee's chairman until Democrats lost House control in 1994, Dingell often "went for the jugular," says John Calfee, a scholar at the American Enterprise Institute. Now that he's back in power, the 80-year-old Dingell promises in an interview that "we're going to try to have a rather broader oversight" into health-care matters.
Dingell says he plans to look at the Medicare prescription-drug benefit for senior citizens pushed through by President Bush and congressional Republicans, and at the generic-approval process. So does California Rep. Henry Waxman, the new chairman of the Government Reform Committee and another of the industry's sometime-antagonists.
The House Ways and Means and Senate Finance committees also will take up Medicare: "I'm going to have hearings right off the top on the drug benefit to help make sure it works better," Montana Sen. Max Baucus, 65, the incoming finance chairman, said in an interview. And Massachusetts Sen. Edward Kennedy will use his Health, Education, Labor and Pensions Committee to work on drug-safety issues.
Industry leaders including Jim Greenwood, the president of the Washington-based Biotechnology Industry Organization, say they expect the House to pass a change to the 2003 Medicare legislation that would let the federal government directly negotiate prices for the 22.5 million elderly and disabled citizens enrolled in the drug plan.Copyright © 2007 Asbury Park Press.