"What are we doing," he demanded, "making our seniors choose between food and medicine? We need a prescription drug benefit under Medicare. I don't care if big drug companies are fighting against it. We, the people of this country, can have a prescription drug benefit if we are willing to fight for it."
The crowd of several thousand broke into hoots of support for his soapbox populism. Seattleites, after all, have just as many cases of arthritis, ulcers, and congestive heart failure as any Americans. But as pharmaceutical companies release ever stronger and more effective products, those drugs have not only become a lifeline for the sick and the elderly, but also a crushing financial burden. By claiming to be fighting on behalf of those people, Al Gore is winning populist points; but in reality, his plan lacks the teeth to actually take a bite out of industry profits.
Throughout the week, Gore has crowed about his $400 billion plan for health-care reforms, which includes Medicare coverage for prescription drugs as the campaign centerpiece. Currently, Medicare covers part of in-patient and out-patient care for all senior citizens, but prescription drugs are only covered by expensive supplements or private insurance. Under Medicare, Gore's plan would cover 50 percent of drug costs, up to $5,000 annually. In Seattle, this proposal was touted as evidence of Gore's scrappy righteousness. Because of the plan, "we have some powerful forces lined up against us," he assured the crowd, eliciting even more yelping and sign-waving.
Gore's Erin Brockovich routine strikes a chord because the pharmaceutical industry is such an obvious bad guy. Drug companies' profits exploded in the 1990s, buoyed by their captive consumer market and huge political influence. The industry received over $247 billion in tax breaks and outright government funding from 1990-1996, but at the same time stayed free of any government price controls. With patent laws that give companies a virtual monopoly on most drugs for over 10 years, pharmaceutical companies have been left to decide how much their life-saving pills will cost. The result is clear: In 1999, the top 12 drug companies alone netted $27.3 billion in profit. In fact, according to Fortune magazine, pharmaceutical firms boast the biggest profit margins of any business sector, at a whopping 18.6 percent (most industries average about five percent). Unlike other industries, however, pharmaceutical companies make these out-of-control profits on the backs of the oldest, sickest, and most vulnerable Americans.
Those profits are protected by huge amounts of cold, hard cash. More than $235 million was spent on lobbying in 1997-1999 alone, according to industry disclosures. Vice-presidential candidate Lieberman received the sixth-highest amount of drug-industry money of all senators (over $137,000 in the last seven years). Gore is likewise a longtime friend of the pharmaceutical industry. As a congressman, he advocated loosening restrictions on the marketing of prescription drugs. As vice president, he presided over the further demolition of those consumer protections. The result is that pharmaceutical companies are now free to market directly to consumers, enticing them to shell out top dollar for everything from thicker hair to enhanced genital circulation. The resulting bonanza has skewed the entire industry, as big drug companies increasingly spend their budgets on developing and marketing popular lifestyle drugs, undermining research on more important drugs.
Given his history, it's no surprise that Al Gore's "populist" proposal might actually help pharmaceutical companies, rather than reign them in. According to Steve Weissman of Public Citizen's Congress Watch, it would "certainly increase overall sales for the industry, and actually have fewer price controls than the Republican plan." It's true that Gore would reduce drug prices for consumers by 50 percent, but that reduction would mainly be the result of expensive government subsidies--as opposed to an actual lowering of hyper-inflated drug prices. The drug companies would voluntary pitch in a 10 to 20 percent discount because Medicare would order in bulk, but the rest of the consumer savings would actually come from government money. For example, a six-week dose of Xalatan--an eye drop that can stave off blindness for glaucoma sufferers--is priced at $45 by Pharmacia Corporation, despite the fact that its key ingredient costs pennies to make. Under Gore's plan, the government would not actually dictate a fairer price for the drug. Rather, it would simply pay what Pharmacia is asking, pitching in anywhere from $12-$16 to supplement the $22.50 that the consumer would pay. Billions of dollars in similar co-payments would pour from the federal government directly to drug companies, and the industry would actually gain new consumers, because more people would be able to afford more drugs. It's true that the industry fears Democrats, because they may one day ask for the kind of price control that Medicare has over other sectors of health care, but for now, a good portion of Gore's $400 billion plan would be pure pork--money handed straight to the big drug companies.
Gore's drug plan is a classic populist shell game: The consumer will equate lowered prices with less meteoric profits for the drug industry, and Gore will appear to have won a decisive battle that never took place. His campaign may owe its health to this kind of rhetoric, but it's bad medicine all the same.
In a tight election where seniors are a key voting block, it's also blatant political pandering to make prescription drugs for the elderly the focus of a national health-care program. After all, America is a land where child poverty hovers around 20 percent and the income distribution resembles that of a Third World country. Because income is by far the greatest single indicator of health, Al Gore would do well to abandon his faux populist corporate partnerships and refocus on the real health-care battle raging in America: the fight for lasting economic justice.