A Half Billion Dollar Tax Gift to BioTech Company

(10 am. – promoted by ek hornbeck)

Cross posted from The Stars Hollow Gazette

Unbeknownst to most of the legislators and public, tucked very neatly in section 632 (pdf) of the “fiscal cliff” bill, was provision that gave the world’s largest biotechnology firm, Amgen, a drug maker that sells a variety of medications, a half billion dollar gift that allows the company to evade Medicare cost-cutting controls by delaying price restraints on a class of drugs used by kidney dialysis patients for two years. Meanwhile in December, Amgen had been fined  $762 million in civil and criminal penalties for illegal marketing of one of its other drugs. This pricing break would wipe out two thirds of those fines.

This undercover handout of taxpayer’s dollars during a so-called “fiscal crisis” was reported in depth by The New York Times investigative reporters, Eric Lipton and Kevin Sack, who also revealed the “architects” of this giveaway, Republican Minority Leader Mitch McConnell, Democratic Senator Max Baucus, chair of the Senate Finance Committee, and that committee’s ranking Republican, Orrin Hatch.

Amgen has deep financial and political ties to lawmakers like Senate Minority Leader Mitch McConnell, Republican of Kentucky, and Senators Max Baucus, Democrat of Montana, and Orrin G. Hatch, Republican of Utah, who hold heavy sway over Medicare payment policy as the leaders of the Finance Committee.

It also has worked hard to build close ties with the Obama administration, with its lobbyists showing up more than a dozen times since 2009 on logs of visits to the White House, although a company official said Saturday that it had not appealed to the administration during the debate over the fiscal legislation.

The measure flies in the face of attempts to curb the enormous expense of dialysis for the Medicare program by reversing incentives to over-prescribe medication. But that didn’t deter the “three amigos” from sneaking in the provision to their generous benefactor:

Amgen’s employees and political action committee have distributed nearly $5 million in contributions to political candidates and committees since 2007, including $67,750 to Mr. Baucus, the Finance Committee chairman, and $59,000 to Mr. Hatch, the committee’s ranking Republican. They gave an additional $73,000 to Mr. McConnell, some of it at a fund-raising event for him that it helped sponsor in December while the debate over the fiscal legislation was under way. More than $141,000 has also gone from Amgen employees to President Obama’s campaigns.

What distinguishes the company’s efforts in Washington is the diversity and intensity of its public policy campaigns. Amgen and its foundation have directed hundreds of thousands of dollars in charitable contributions to influential groups like the Congressional Black Caucus and to lesser-known groups like the Utah Families Foundation, which was founded by Mr. Hatch and brings the senator positive coverage in his state’s news media.

Amgen has sent large donations to Glacier PAC, sponsored by Mr. Baucus in Montana, and OrrinPAC, a political action committee controlled by Mr. Hatch in Utah.

Not surprisingly when the news of this giveaway hit the paper, it enraged a bipartisan group of legislators to repeal this section.

U.S. Rep. Peter Welch (D-Vt.) filed legislation this week to eliminate the exemption for a class of drugs, including Amgen’s Sensipar, that are used by kidney dialysis patients. [..]

“Amgen managed to get a $500-million paragraph in the fiscal-cliff bill and virtually no one in Congress was aware of it,” Welch said. “It’s a taxpayer ripoff and comes at a really bad time when we’re trying to control healthcare costs. Amgen should not be allowed to turn Medicare into a profit center.” [..]

Other co-sponsors of the bill seeking repeal include House Republican Richard Hanna of New York and two House Democrats, Jim Cooper of Tennessee and Bruce Braley of Iowa.

Rep. Welch sat down with Bill Moyers on Moyers & Company to discuss Amgen’s “sweetheart deal”

The transcript can be read here
“When there is this back room dealing that comes at enormous expense to taxpayers and enormous benefit to a private, well-connected, for-profit company, we’ve got to call it out,” Welch tells Bill. “Those members of Congress who are concerned about the institution, about our lack of credibility, about the necessity of us doing things that are in the public good as opposed to private gain, we’ve got to call it out.”


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  1. TMC
  2. terryhallinan

    initiated by the old liberal psychopath Nixon with his War on Cancer  is now able to compete with bankers and oil companies for feeding at the public trough?

    Beats the defense contractors doing it.

    Best,  Terry

    P.S. I guess it’s kind of ironic that defense contractors who feed only at the public trough might not be given tax breaks – but be sure they are.

  3. TMC

    of health care costs is the cost of medications. Where it costs the tax payer is under Medicare D. Controlling those costs would reduce Medicare costs by billions.

    I do know that one defense contractor, General Electric, paid no taxes in 2010.

  4. terryhallinan

    I do know that one defense contractor, General Electric, paid no taxes in 2010.

    GE today is primarily a financier, a bank in plainer words.  It was bailed out.

    How could you expect a banker to pay?  They are takers, not makers.

    Obviously they must be joshing when they claim billions in profits.  Great kidders these people.

    I doubt drugs are the main problem in healthcare costs.  A day of hospitalization would pay for an awful lot of most drugs.

    A biotech I like for what they are doing may be able to make a therapeutic vaccine for about 11 cents a shot to treat cancer patients on an outpatient basis.  But it has all manner of other targets including cattle with hoof and mouth disease.  Giving a cow a shot in the head with a rifle would be much cheaper than a shot in the rump if the figuring is correct.

    Why so costly anyway?

    – Our antiquated approval system and predatory financing.  The biotech has been a bled out corpse once after spectacular early results and its share count is exploding like a bunker buster bomb.

    Should the biotech get its vaccine approved somehow, they will have to hand it off to a Merck or Pfizer, who will reward them with a small percentage of profits if there are any.

    Best,  Terry

  5. TMC

    Top-100 Defense Contractors

    U.S. Department of Defense Fiscal Year 2012

    In FY 2012, top awardee Lockheed Martin received $29.28 billion in contract awards (prime contracts) or 8.1% of total contract funds awarded by the DoD. Runner-up is Boeing with $27.79 billion (7.7%) followed by Raytheon in third place with $14.21 billion (3.9%). General Dynamics has received $13.58 billion (3.8%) followed by Northrop Grumman, United Technologies, L-3 Communications, BAE Systems, SAIC, and Huntington Ingalls. BAE Systems, #8 on the list, is the largest foreign contractor in FY 2012.

    GE builds the engines for a number of military jet fighters.

    You’re thinking of General Motors

  6. TMC

    they don’t hand off the patented medications to anyone. They market them on their own. They are, in fact, the largest biopharmaceutical company in the world.

    Amgen is an American-based multinational biopharmaceutical company headquartered in Thousand Oaks, California. Located in the Conejo Valley, Amgen is the world’s largest independent biotechnology firm. Epogen and Neupogen (the company’s first products on the market) were the two most successful biopharmaceutical products at the time of their respective releases.

    Amgen is the largest employer in Thousand Oaks and second only to the United States Navy in terms of number of people employed in Ventura County. BusinessWeek ranked Amgen first on the S&P 500 for being one of the most “future-oriented” of those five hundred corporations.[2] BusinessWeek ostensibly calculated the ratio of research and development spending, combined with capital spending, to total outlays; Amgen had the fourth highest ratio, at 506:1000.

    They make a class od drugs called biosimilars

    Biosimilars also known as follow-on biologics are biologic medical products whose active drug substance is made by a living organism or derived from a living organism by means of recombinant DNA or controlled gene expression methods.

    Biosimilars or follow-on biologics are terms used to describe officially-approved subsequent versions of innovator biopharmaceutical products made by a different sponsor following patent and exclusivity expiry on the innovator product.[1] Biosimilars are also referred to as subsequent entry biologics (SEBs) in Canada.[2] Reference to the innovator product is an integral component of the approval.

    Unlike the more common small-molecule drugs, biologics generally exhibit high molecular complexity, and may be quite sensitive to changes in manufacturing processes. Follow-on manufacturers do not have access to the originator’s molecular clone and original cell bank, nor to the exact fermentation and purification process, nor to the active drug substance. They do have access to the commercialized innovator product. Differences in impurities and/or breakdown products can have serious health implications. This has created a concern that copies of biologics might perform differently than the original branded version of the product. Consequently only a few subsequent versions of biologics have been authorized in the US through the simplified procedures allowed for small molecule generics, namely Menotropins (January 1997) and Enoxaparin (July 2010), and a further eight biologics through the 505(b)(2) pathway.

    Amgen and other large pharmaceutical companies are against negotiating drug prices for Medicare to keep costs down for the agency and Medicare D participants. It fought a provision that would have required them to negotiate with Medicare to reduce drug prices, like they have to do with the VA and Medicaid.

    This extension of was a sweetheart gift that will just give those who want to end Medicare more fuel for their argument to keep on chipping away. Raising the eligibility age to 67 is still on the table.

  7. TMC

    The drug, not a vaccine, is already on the market and Amgen has been making a fortune off its sale.

  8. TMC
  9. terryhallinan

    a financial corporation.  There was no bailout of defense contractors.  GE got bail money.

    Worst Bailout In U.S. History: General Electric Gets $182.5 Billion


    GE also gets a cut of nearly every wind turbine sold worldwide but is more hindrance than help.  There are better turbines than the ones using GE’s patents but they are mostly unsellable without GE’s imprimatur.

    GE is also a partner in some wind farms and other renewable energy projects but it is not primarily green by any stretch of the imagination.

    Like an octopus, GE has many tentacles.

    Best,  Terry  

  10. terryhallinan

    just another big drug company today.

    It is called a biotech because of its origins.  

    Today Amgen is a drug pusher.  It mostly buys research rather than doing it like all Big Pharma.

    Best,  Terry

  11. terryhallinan

    with the deadly Listeria bacteria.  Listeria is the bug that most recently made news by killing people eating cantaloupe infected with the bacteria.

    Dr. Yvonne Paterson spent a couple decades trying to sell anybody on developing her therapeutic Listeria vaccine.  The Listeria is alive but has been stomped on, billy clubbed, kicked, beaten, tasered by cops :-) so its ability to do harm to very sick people is minimal.

    Nearly all vaccines have an adjuvant, a poison if you will that grabs the attention of the immune system.  One that needed no adjuvant was the smallpox vaccine because the active immunogen needed no spiking to get attention.  I don’t think Louis Pasteur’s rabies vaccine had an adjuvant either but it is still argued whether rabies killed more people than the vaccine in its original formulation.  But a live killer bacteria is a departure.

    Therapeutic vaccines can be traced to the 8th Century when Chinese herbalists packed toxins around tumors.  Parke-Davis sold a version of this kill or cure treatment as late as the 1950’s but cutting and burning and poisoning tumors and patients took over.  

    Back to the future, huh?

    BTW I had the pleasure of once talking to Dr. Paterson briefly.  She is now a frail, ancient lady but there is still fire in her eyes.

    Yvonne is one my drug warrior heroes, not at all like Obama’s.

    Best,  Terry

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