California's own biomedical giant, Amgen, appears to have received an especially sweet deal as Congress rushed to avoid the automatic tax hikes and spending cuts of the so-called "fiscal cliff."
The legislation was necessary to avoid economic hardship. But to get the bill through Congress, its backers loaded it with an orchard full of plums, including tax breaks for NASCAR track owners and rum producers.
As detailed by the New York Times last Sunday, senators, Democrats and Republicans alike, approved obscure language that appears to benefit Amgen although the company says patients with end-stage kidney disease are the ones who truly will be helped.
In essence, the provision excluded Amgen's drug, Sensipar, a pill used by kidney dialysis patients, from Medicare price controls for an additional two years beyond 2014. The Times pegged the two-year cost to taxpayers at $500 million.
The stated goal of the extension is to ensure that patient care isn't disrupted as the federal government changes its methods of providing health care to poor and disabled individuals.
In a statement, Amgen said it supported the delay "until both the government and providers were ready for the change and could ensure patients would have access to these important medications." Amgen executives also said three other companies, and their patients, will benefit from the extension.
Kidney disease is a significant cost-driver for government health care programs. A recent Government Accountability Office study found that Medicare overpaid for dialysis by $650 million to $880 million in 2011. Dialysis care for about 365,000 individuals cost the Medicare system about $10.1 billion in 2011.
Amgen is one of many power players in the nation's capital, deploying, by the Times' count, 74 lobbyists. It's also a ready source of campaign money for senators apparently involved in the deal including Sen. Max Baucus, D-Mont., and Sen. Orrin Hatch, R-Utah.
In a clear sign that companies get a significant return on their investment in their lobbyists, Amgen executives highlighted the change in the law during a call with stock analysts and investors shortly after the legislation won approval, suggesting the company, with more than $15 billion in annual revenue, stands to profit handsomely from the provision.
Amgen is a significant player in Sacramento, where it gets its share of wins in the Legislature. However, Medi-Cal for low-income Californians is not an especially lucrative market for Sensipar. The state spends $5 million a year for the drug out of the $2.3 billion cost of pharmaceuticals in California's fee-for-service Medi-Cal program.
A month before President Barack Obama signed the "fiscal cliff" legislation into law, Amgen pleaded guilty to federal changes that it improperly marketed another drug. The company agreed to pay $762 million in penalties and fines. The juxtaposition of a guilty plea and a win on Capitol Hill shows power players seem endlessly able to incur the wrath of regulators while remaining influential with politicians.
At the end of last week, a bipartisan group in the House introduced a bill to repeal the Sensipar provision. Given Amgen's clout, chances are slim the House bill will pass. But it's a good fight to fight.