Look for the Union Label

  • by: |
  • 11/04/2011

Generally, when you think about President Obama’s  “core constituencies,” blue-collar unions are at or near the top of the list.

Consider, then, the following groups and their united position against the President’s plan to impose additional mandatory rebates on the pharmaceutical industry:

(And let’s call it what it is – a tax.  More precisely, an excise tax imposed by Uncle Sam on drug sales – and not a single penny goes towards lower costs for a single patient.  Not one. The cash goes into the general fund.)

·      The International Brotherhood of Electrical Workers

·      The International Brotherhood of Boilermakers

·      The International Association of Police Associations

·      Sheet Metal Workers’ International Association

·      International Association of Fire Fighters

·      International Association of Bridge, Structural, Ornamental, and Reinforcing Iron Workers

And the soliDarity is for a good reason – according to a new study by the Battelle Technology Partnership Practice, the President’s new tax on Medicare Part D would:

·      Increase Medicare prescription drug premiums by up to 40%

·      Increase annual out-of-pocket spending for almost 18 million seniors by as much as $208 annually

·      Increase yearly total out-of-pocket drug costs for seniors by up to $3.7 billion.

The bottom line is the bottom line: As Yale Economist Fiona Scott Morton plainly states, “Applying the Medicaid rebate rule to Medicare Part D would likely result in higher prices for consumers in the private sector.”

That is not what the union movement signed on for when they supported the passage of the Affordable Care Act.

But wait, it gets worse.

The President’s tax a job killer.  According to the Battelle Report, the tax could cause the elimination of between 130,000 and 260,000 jobs – many of them in the construction industry -- and hence the union revolt.

And, to add insult to injury, the President’s tax would also stifle life science innovation.

It’s hugely disappointing that the same man who (as a United States Senator) once said that …

“Realizing the promise of personalized medicine will require continued federal leadership and agency collaboration; expansion and acceleration of genomics research; a capable genomics workforce; incentives to encourage development of genomic tests and therapies; and greater attention to the quality of genetic tests, direct-to-consumer advertising and use of personal genomic information."

… is now advocating a policy that would result in precisely the opposite.

After speaking (during the State of the Union and a widely quoted op-ed in the Wall Street Journal) about the need for America to embrace innovation – President Obama is trying to make it more difficult, specifically when it comes to the desire to invest in pharmaceutical innovation – a sure bet under no circumstances.

If innovation is one of the key answers to our national economic recovery, then the President should abide by what he said, “Our economy is not a zero-sum game. Regulations do have costs; often, as a country, we have to make tough decisions about whether those costs are necessary. But what is clear is that we can strike the right balance. We can make our economy stronger and more competitive, while meeting our fundamental responsibilities to one another.”

As Harvard University health economist (and Obama healthcare advisor) David Cutler has noted: "Virtually every study of medical innovation suggests that changes in the nature of medical care over time are clearly worth the cost."

Let’s keep our eye on the prize.  No, not ill-considered budget reduction on the backs of working Americans and seniors – the real prize: better access to smarter healthcare for all Americans. Rather than wasting time on spin, let’s redouble our efforts on innovation.  Then, when we succeed through brainpower and teamwork (and, hopefully some civil bipartisanship), the circus surrounding the President’s tax will be but a footnote in the history of American healthcare.


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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