Paul Krugman: The K Street Prescription

Lobbyists on drugs. Simply the best Krugman column I’ve read in many months, maybe ever. Utterly devastating. Please read it.

The K Street Prescription
Published: January 20, 2006

The new prescription drug benefit is off to a catastrophic start. Tens of thousands of older Americans have arrived at pharmacies to discover that their old drug benefits have been canceled, but that they aren’t on the list for the new program. More than two dozen states have taken emergency action.

At first, federal officials were oblivious. “This is going very well,” a Medicare spokesman declared a few days into the disaster. Then officials started making excuses. Some conservatives even insist that the debacle vindicates their ideology: see, government can’t do anything right.

But government works when it’s run by people who take public policy seriously. As Jonathan Cohn points out in The New Republic, when Medicare began 40 years ago, things went remarkably smoothly from the start. But this time the people putting together a new federal program had one foot out the revolving door: this was a drug bill written by and for lobbyists.

Consider the career trajectories of the two men who played the most important role in putting together the Medicare legislation.

Thomas Scully was a hospital industry lobbyist before President Bush appointed him to run Medicare. In that job, Mr. Scully famously threatened to fire his chief actuary if he told Congress the truth about cost projections for the Medicare drug program.

Mr. Scully had good reasons not to let anything stand in the way of the drug bill. He had received a special ethics waiver from his superiors allowing him to negotiate for future jobs with lobbying and investment firms – firms that had a strong financial stake in the form of the bill – while still in public office. He left public service, if that’s what it was, almost as soon as the bill was passed, and is once again a lobbyist, now for drug companies.

Meanwhile, Representative Billy Tauzin, the bill’s point man on Capitol Hill, quickly left Congress once the bill was passed to become president of Pharmaceutical Research and Manufacturers of America, the powerful drug industry lobby.

Surely both men’s decisions while in office were influenced by the desire to please their potential future employers. And that undue influence explains why the drug legislation is such a mess.

The most important problem with the drug bill is that it doesn’t offer direct coverage from Medicare. Instead, people must sign up with private plans offered by insurance companies.

This has three bad effects. First, the elderly face wildly confusing choices. Second, costs are high, because the bill creates an extra, unnecessary layer of bureaucracy. Finally, the fragmentation into private plans prevents Medicare from using bulk purchasing to reduce drug prices.

It’s all bad, from the public’s point of view. But it’s good for insurance companies, which get extra business even though they serve no useful function, and it’s even better for drug companies, which are able to charge premium prices. So whose interests do you think Mr. Scully and Mr. Tauzin represented?

Which brings us to the larger question of cronyism and corruption.

Thanks to Jack Abramoff, the K Street project orchestrated by Tom DeLay is finally getting some serious attention in the news media. Mr. DeLay and his allies have sought, with great success, to ensure that lobbying firms hire only Republicans. But most reports on the project still miss the main point by emphasizing the effect on campaign contributions.

The more important effect of the K Street project is that it allows the party machine to offer lavish personal rewards to the faithful. For a congressman, toeing the line on legislation brought free meals in Jack Abramoff’s restaurant, invitations to his sky box, golf trips to Scotland, cushy jobs for family members and a lavish salary after leaving office. The same kinds of rewards are there for loyal members of the administration, especially given the Bush administration’s practice of appointing lobbyists to key positions.

I don’t want to overstate Mr. Abramoff’s role: although he was an important player in this system, he wasn’t the only one. In particular, he doesn’t seem to have been involved in the Medicare drug deal. It’s interesting, though, that Scott McClellan has announced that the White House, contrary to earlier promises, won’t provide any specific information about contacts between Mr. Abramoff and staff members.

So I have a question for my colleagues in the news media: Why isn’t the decision by the White House to stonewall on the largest corruption scandal since Warren Harding considered major news?

The Discussion: 5 Comments

excellent article. i don’t know why it’s not major news but it should be. someone should really pick up the ball on this one soon. i can only imagine the pain of having to work through numerous insurance policies to see where it’s not working.

bush campaigned on reducing drug costs for seniors and now that the bill has been enacted (and the liar’s been elected), the reality is as plain as his nose. poor parents and grandparents (obviously not his) are seeing their drug costs double and triple! i know because you don’t know what misery is till one of these seniors tell you they have to work an extra week just to afford their new prescription costs.

January 20, 2006 @ 3:05 am | Comment

What do you expect from an administration bankrolled by Big Pharma and with a former Pfizer/Pharmacia CEO (Rumsfeld) on board? The pharma companies have more lobbyists than there are congressmen. Your politicians fly around the country on Pfizer’s corporate jets. The drug companies even had their own lawyer appointed to be the FDA’s chief counsel (while Scott McLellan’s brother was FDA chairman). The Republicans (and all Americans) are competely subservient to the agenda of the pharmaceutical industry. Good health!

January 20, 2006 @ 4:43 am | Comment

In the beginning, I decided to join the campaign to impeach your “smirking chimp”, my “dum’ass botch”. As evidence for that, you’ll soon be invited to click on a hyperlink.

Before doing so, however, I would like you to read through the rest of this text. In case, you’d like to know, the U.R.L for your blog, specifically, , is found at the third hyperlink on the list below … ah, please remember, no clicking until AFTER reading the entire text.

Perusing your blog, I believe I arrived at what is a reasonable inference. That is, both you and your readers would welcome news that indicates the campaign to impeach the president is increasing in both vigor and breadth. Ah, you’ll find that evidence by clicking on the second enclosed hyperlink.

As for my plan for capturing Osama, you’ll find it by clicking on the first listed hyperlink:

.he who is known as sefton

January 20, 2006 @ 2:52 pm | Comment

Does this mean it’s time to invest in some pharmaceutical stocks?

January 20, 2006 @ 7:23 pm | Comment

Why Bush wanted Tort reform. When my brother a 63 year old black male died 2 months and 8 days after taking ACEON, a medication approved by the FDA in 1999 witha “Black Box warning for pregant women, but no warning for blacks, I wrote a letter to the FDA.

Soon thereafter, Scott Mclellan became Bush’s Press Secretary.

The Law firm of Step-Toe and Johnson in West Virginia was able to get the State Supreme Court of WVA to “refuse” to accept my appeal.

I had an appeal of right. My Case No in WVA 04-C-26. Check it out. My appeal to the U.S. Supreme Court # 050060 was returned by Ann McCamey in DC 202 479-3392 as being out of time in her January 27, 2006 letter to me.

I responded and illustrated it was because of misconduct on behalf of the WVA judiciary and the WVA Medical Board was why it was out of time.

Daniel A. Young, Sr. 919 610-5255 or 252-492-7073
Po Box 3262, Henderson NC 27536

April 19, 2006 @ 10:24 pm | Comment

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