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A public policy blog from AEI
In a sharp rebuke of a New York Times investigation, an analysis by the nonpartisan Congressional Budget Office found that a last-minute provision added to the early January “fiscal cliff” bill could save taxpayers as much as $4 billion—rather than costing Americans $500 million, as the Times had claimed.
The brouhaha revolves around a Times investigation last month complemented a few days later by a follow up editorial attacking a trio of senators for supporting a change in reimbursement policy for a class of drugs used by kidney dialysis patients.
In early January, as the negotiations were coming to a head, lawmakers on the Senate Finance Committee—Republicans and Democrats—inserted a paragraph in the bill (in Section 632) that delayed a number of oral medications from Medicare price controls, including Sensipar, a pill made by Amgen, the world’s largest biotechnology company, for an additional two years.
The Times’ instinct, if not its execution, was good. The nature of health care reform opens the door to potential legislative mischief as lobbyists attempt to “correct” legislation that is doing its job fine, thank you. If there is corruption, let’s shine a light on it.
As the Times had it in its narrative, Amgen was handed a $500 million gift in the form of a secret provision modifying the Patient Protection and Affordable Care Act. According to the newspaper, the change was sneaked into the bill in a conspiracy involving the biotechnology firm’s army of 74 lobbyists and a handful of politicians.
The Times’ article, implicitly, and the editorial, explicitly, smeared three Finance Committee senators in particular: Max Baucus (D-MT), Orrin Hatch (R-UT) and Mitch McConnell (R-KY). The newspaper asserted each had “deep financial and political ties” to Amgen, all but stating they had sold out the American people in exchange for campaign contributions.
“This dreadful episode is a classic example of the power of special interests to shape legislation and shows how hard it may be to carry out the reforms needed to cut health costs,” the Times wrote.
As is often the case with America’s most influential paper, the articles had huge impact. Within days, the web exploded with hundreds of stories slamming Amgen and the senators. A quartet of Congressmen introduced a bill to repeal what they called the “Amgen gift.”
“This eleventh-hour, backroom deal confirms the American public’s worst suspicions of how Congress operates,” said co-sponsor Democrat Peter Welch.
Based on the just-released CBO analysis, it appears the Time and the critical lawmakers got the story wrong. The independent CBO report suggests numerous journalistic missteps, starting with the paper’s myopic focus on Amgen. Its editorial was titled “Amgen gets a lift from Congress.” Yet, the company most impacted by the provision is the Genzyme subsidiary of French pharmaceutical giant Sanofi Aventis, which makes the dialysis drugs sold as Renagel and Renvela. Those crucial facts are conveniently absent from the Times piece–perhaps because they would have made the narrative too messy.
The Times also omitted that the provision was designed to protect Medicare seniors who live in rural areas. That’s why Sen. Hatch (Utah), Sen. Baucus (Montana) and Sen. McConnell (Kentucky) said they were persuaded to support the extension in the first place. There are just “too many unanswered questions about how to make sure patients get the medicine they need and how rural dialysis clinics would navigate the new layers of red tape it creates,” Sen. Baucus said at the time.
But there’s more, as they say in late night TV. The Times entire story spun on the unsourced claim that the extension “is projected to cost $500 million.” Projected by whom? The reporters never tell us, and now it appears the newspaper of record may have reported as fact an errant comment or pure speculation.
The CBO notes that many of the drugs in question will go off patent and costs will naturally go down as generics enter the marketplace. Consequently, a delay would actually save Medicare more than $1 billion. Repealing the clause and locking in an unnecessarily high payment rate for the targeted brand name drug rates, as the Times and the Welch-led bill are urging, would have the unintended effect of locking in higher reimbursement rates, nixing the sizable benefits of lower cost generics.
The CBO estimates that if the delay was extended until 2017, Part D beneficiaries would save even more through lower out of pocket costs—as much as $500 million. Stretching the extension out ten years would yield additional savings, as much as $4 billion.
The drugs in the crosshairs help patients with chronic kidney disease on dialysis manage secondary hyperparathyroidism which if untreated can lead to medical complications. If access to the medicines were removed from Medicare Part D prematurely, poorer patients on the margins would undoubtedly choose to forgo taking appropriate drugs because they would now be too expensive.
After ballyhooing the story twice in January, the Times has so far chosen to ignore the CBO study, leaving its readers in the dark. Neither the paper nor the reporters involved have responded to my request for a statement.
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