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Lipton and Sack report: "Just two weeks after pleading guilty in a major federal fraud case, Amgen, the world's largest biotechnology firm, scored a largely unnoticed coup on Capitol Hill."

Amgen is the the world's largest biotechnology firm. (photo: unknown)
Amgen is the the world's largest biotechnology firm. (photo: unknown)

Medicare Fraud Wins in Fiscal Cliff Bill

By Eric Lipton, Kevin Sack, The New York Times

20 January 13


ust two weeks after pleading guilty in a major federal fraud case, Amgen, the world's largest biotechnology firm, scored a largely unnoticed coup on Capitol Hill: Lawmakers inserted a paragraph into the "fiscal cliff" bill that did not mention the company by name but strongly favored one of its drugs.

The language buried in Section 632 of the law delays a set of Medicare price restraints on a class of drugs that includes Sensipar, a lucrative Amgen pill used by kidney dialysis patients.

The provision gives Amgen an additional two years to sell Sensipar without government controls. The news was so welcome that the company's chief executive quickly relayed it to investment analysts. But it is projected to cost Medicare up to $500 million over that period.

Amgen, which has a small army of 74 lobbyists in the capital, was the only company to argue aggressively for the delay, according to several Congressional aides of both parties.

Supporters of the delay, primarily leaders of the Senate Finance Committee who have long benefited from Amgen's political largess, said it was necessary to allow regulators to prepare properly for the pricing change.

But critics, including several Congressional aides who were stunned to find the measure in the final bill, pointed out that Amgen had already won a previous two-year delay, and they depicted a second one as an unnecessary giveaway.

"That is why we are in the trouble we are in," said Dennis J. Cotter, a health policy researcher who studies the cost and efficacy of dialysis drugs. "Everybody is carving out their own turf and getting it protected, and we pass the bill on to the taxpayer."

The provision's inclusion in the legislation to avert the tax increases and spending cuts that made up the so-called fiscal cliff shows the enduring power of special interests in Washington, even as Congress faces a critical test of its ability to balance the budget.

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.

Aides to Mr. Hatch and Mr. Baucus, and a spokeswoman for Amgen, said the delay would give the Medicare system and medical providers the time they needed to accommodate other complicated changes in how federal reimbursements for kidney care were determined.

"Sometimes when you try to do too much and too quickly, you screw up," said Antonia Ferrier, a spokeswoman for Mr. Hatch. The goal, an Amgen spokeswoman said in a written statement, is "to ensure that quality of care is not compromised for dialysis patients."

But the measure runs counter to a five-year effort in Washington to control the enormous expense of dialysis for the Medicare program by reversing incentives to overprescribe medication.

Amgen's success also shows that even a significant federal criminal investigation may pose little threat to a company's influence on Capitol Hill. On Dec. 19, as Congressional negotiations over the fiscal bill reached a frenzy, Amgen pleaded guilty to marketing one of its anti-anemia drugs, Aranesp, illegally. It agreed to pay criminal and civil penalties totaling $762 million, a record settlement for a biotechnology company, according to the Justice Department.

Amgen, whose headquarters is near Los Angeles and which had $15.6 billion in revenue in 2011, has a deep bench of Washington lobbyists that includes Jeff Forbes, the former chief of staff to Mr. Baucus; Hunter Bates, the former chief of staff for Mr. McConnell; and Tony Podesta, whose fast-growing lobbying firm has unusually close ties to the White House.

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.

And when Mr. Hatch faced a rare primary challenge last year, a nonprofit group calling itself Freedom Path sponsored advertisements in Utah that attacked his opponent, an effort that tax records released in November show was financed in large part by the Pharmaceutical Research and Manufacturers of America, a trade group that includes Amgen.

In some cases, the company's former employees have found important posts inside the Capitol. They include Dan Todd, one of Mr. Hatch's top Finance Committee staff members on health and Medicare policy, who worked as a health policy analyst for Amgen's government affairs office from 2005 to 2009. Mr. Todd, who joined Mr. Hatch's staff in 2011, was directly involved in negotiating the dialysis components of the fiscal bill, and he met with "all the stakeholders," Mr. Hatch's spokeswoman said, not disputing when asked that this included Amgen lobbyists.

For years, Amgen used its clout in Washington to lobby for generous Medicare payments for its blockbuster drug, Epogen, which fends off anemia in dialysis patients.

The Medicare program covers most costs associated with treating severe renal disease, regardless of a patient's age, and the dialysis market continues to grow steadily. In 2010, the government's kidney program was spending $1.9 billion on injectable anti-anemia drugs like Epogen.

But nearly a decade ago, evidence started to surface that questioned the effectiveness and safety of Epogen at the levels being used.

Researchers found that Medicare's practice of reimbursing providers with separate payments for the drugs and for dialysis treatments encouraged overprescription because the providers made healthy profits with each dose. They also found that high doses posed cardiovascular risks to patients.

Congress reversed the incentive in 2008 by requiring Medicare to pay a single, bundled rate for a dialysis treatment and related medications starting in 2011. With providers potentially profiting more by prescribing less Epogen, use of dialysis drugs dropped by nearly 25 percent.

But the blow was softened for Amgen and other kidney care companies with a few favors from Congress. Among them was a two-year delay in the inclusion of certain oral drugs, Sensipar among them, in the new bundled payment system. That meant demand for Sensipar would not decline and Amgen would maintain control over pricing.

With that two-year exclusion set to expire in 2014, Amgen's lobbyists began making rounds again on Capitol Hill last fall. In private meetings with staff members of the House Ways and Means and Senate Finance Committees, they argued for another two-year delay, several Congressional aides said.

Committee staff members had been meeting regularly in Room S-124 of the Capitol to negotiate a package of Medicare cuts needed to prevent a large scheduled reduction in doctors' fees. The kidney program was on the table because a new report by the Government Accountability Office had found that Medicare had overpaid for dialysis by up to $880 million in 2011.

The discussions about cutting dialysis reimbursement began late last fall with little focus on a delay for oral drugs, but it was eventually endorsed by leading staff members for Mr. Baucus and Mr. Hatch, Congressional aides said.

Aides to the senators said the delay made sense because the Government Accountability Office had warned in early 2011 that federal regulators should take care in setting compensation levels for the drugs.

But others on Capitol Hill saw no justification for further delay.

"It is disappointing," said a Democratic Congressional aide who declined to be named because of the issue's sensitivity, "since the status quo encourages prescribing of oral drugs based on financial incentives rather than on best clinical practices."

Mr. Hatch's spokeswoman, Ms. Ferrier, said the involvement of Mr. Todd, the former Amgen employee, had not been inappropriate and that dozens of staff members on Capitol Hill handled matters that might benefit former employers.

"They have to leave their previous lives behind," Ms. Ferrier said. "And Dan has done just that."

After the House was sidelined late in the fiscal negotiations, the Senate gained control of the final bill-writing process, and the provision requested by Amgen was inserted into the legislation by Senate staff members.

Aides to Mr. Baucus and Mr. Hatch emphasized that the White House and Senate leadership, including Mr. McConnell, had the final word on the bill.

A spokesman for Mr. McConnell praised the parts of the legislation related to Medicare, while a White House spokesman declined to comment, saying the matter was decided by players on Capitol Hill.

Many lobbyists and Congressional aides said they first learned of the language when the final bill was posted publicly, only hours before being approved. It called for cutting $4.9 billion over 10 years by lowering Medicare payments for dialysis, but left hundreds of millions on the table by extending the oral drug delay.

At this point, opponents had no way to challenge the provision, as there was a single vote on the entire fiscal package. Mr. Baucus and Mr. Hatch voted in favor.

Aides to the senators said some heavy donors had won and others had lost in the Medicare negotiations - proof that the legislative outcome was based on the merits. "What is the best policy for Montanans and people across the country lies at the heart of every decision Chairman Baucus makes," said Meaghan Smith, a spokeswoman for Mr. Baucus. "It's as simple as that." your social media marketing partner


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+68 # Christopher Warren 2013-01-20 10:15
This is a great example of the "Bi-Partisan" two step that our bought and paid for politicians play in DC.

As long as we let our politicians continue to auction off their votes so they can fund their campaigns nothing will change!

However, the coming calamity of Climate Change will compress our budgets so badly that paying for future Sandy's will consume so much funding that TAXES WILL GO UP!
Because after DEFENSE, there's not much left to cut!
+59 # NanFan 2013-01-20 12:47
This is a huge, HUGE problem, folks!

They buried, into the fiscal cliff deal, a gift to a criminal corp (Amgen) to continue to sell dialysis drugs for kidney patients without government control, in the WAY it was being sold, for which they were convicted! This is not just price gouging by a huge biotech corp; it is the Congress, once again, allowing out-and-out fraud at the expense of the American people's well-being, financial and otherwise.

In the end, remember, the cost to Medicare will be another $500 million! AND the price gouging that took place fraudulently by Amgen showed that, as this article points out, "Medicare overpaid for dialysis by up to $880 million in 2011" ALONE! And the biggest part of it is the web of deceit and subterfuge by congressional committee members Hatch, Baucaus, and McConnell. They have allowed a convicted, criminal organization to do what they want...regardle ss of fraud. This makes these congress members impeachable.

We need to put the lid on corporate lobbyists now. No corporate funding AT ALL. Wipe them out. Take the money aspect out of campaigns. Let the people who have no connection to corps lobby for what will be of benefit to all. The grist for the mill needs to be "We care," not "We have the money you want and need if you do what we want." This new Congress has an opportunity to forge a mandate to this effect, but it won't happen unless this kind of revelatory reporting occurs, we get angry, and vote out the scum.

+13 # Kasandra 2013-01-20 19:48
Thank you, Nan. What you've said is so motivating. We have to keep exposing these rats that have been manipulating our resources for decades!
+10 # wwway 2013-01-20 14:46
Have you seen the documentary, Chasing Ice?
We're going to pay dearly for the way we've used earth's resources.
+44 # zornorff 2013-01-20 10:38
So it is business as usual with the F_____g corporations getting their way at the expense of the taxpayer. I guess since this is an entitlement for their money base it is not treated the same way as "entitlements" for the taxpaying public.
+16 # Vardoz 2013-01-20 16:11
The less regulations we have the more corporations will hurt us.
+17 # grouchy 2013-01-20 10:46
As I've always said, GREED RULES! And it controls our political system too! The idea is for us common folk to simply go out and invest in corporate corruption, that way we can keep up at least partially. No other choice.
+11 # DPM 2013-01-20 16:40
The average person won't win that way either. The "cream" flows upward. We lose every time! It's time to "kill the cow"!
+7 # mdhome 2013-01-20 18:12
All well for those with something to invest, consider your self very lucky.
+31 # bobby t. 2013-01-20 10:50
And they send a man to prison for stealing a loaf of bread.
Reminds me of a joke: kid wakes up in the middle of the night and walks by his parents bedroom. He says, " Look at that, and they yell at me for sucking my thumb!"
Government programs have always been a great place to suck money up by these parasites who make Meyer Landsky and Tony Soprano look like small potatoes.
Remember, the government prints money.
+15 # eadg 2013-01-20 11:04
OMG - What a surprise! Skulduggery in government? Say it isn't so!
+38 # Vardoz 2013-01-20 11:12
We see over and over the bribery of our elected reps perteprating crimes against the people of our nation. It is the culture of bribery that is so damaging to our laws, rights and health, safety and welfare. We must hold them accountable because our lives are in these scumbags hands.
+24 # NanFan 2013-01-20 12:59
You're so right, Vardoz, but people still elect scum like Orrin Hatch, McConnel, and others.

They have committed impeachable offenses and we just keep on giving them the ropes to hang us.

Time to end this madness. Thanks to the NYT and RSN, we know about this one. Without this kind of reporting, we may never have known this. So now...we must act to fight against these people EVER getting into office again, ever having power like this again.

Oust the bums before we all strangle on our own intentional ignorance about what's truly harming us.

+9 # Trueblue Democrat 2013-01-20 15:27
"You're so right, Vardoz, but people still elect scum like Orrin Hatch, McConnel, and others."

NanFan, have you already forgotten that Amgen gave Obama's campaign $141,000 and Baucus over $67,000? "Scum" only applies to Republicans who take bribes?

See that's our problem. We expect GOPers to vote out their crooks -- which they won't. We expect Democrats to vote out their crooks -- which they won't either. So we remain stuck with a majority of crooks on both sides of the aisle. (And in the White House regardless of whose administration it is.)
+37 # Barbara K 2013-01-20 11:31
My bet is that McConnell did it. Few others would have access to the Bill to do that, and he's the biggest crook in there.

+12 # NanFan 2013-01-20 13:00

+15 # wwway 2013-01-20 14:52
Im sure other such deals will emerge. I read where Social Secuirty remains on the table. Americans need to remember that SS is a fund they pay into and had nothing to do with the debt. Remember that congress has robbed the US Post Office so it can get rid of this Constitutional entity. If the truth be told congress has probably been robbing SS and don't want us to know that they've been robbing is for years.
+8 # mdhome 2013-01-20 18:17
Shame on the media for not getting this information to the public, especially those who do not seem to get it the regular way.
+33 # Eliza D 2013-01-20 11:57
This is yet another example of why we must jettison this incestuous,corr upt, two party system and start over with a third and fourth party. It's just unworkable. We are not going to see action on bank fraud, climate change or Big Pharma shenanigans until we throw them all out. Keep Elizabeth Warren and Bernie Sanders-that's all.
+4 # mdhome 2013-01-20 18:29
"Only this time, it's the people who are the product...and they just may die trying to stay alive."

Maybe a couple others, maybe
+13 # Sallyport 2013-01-20 12:28
Where the hell is the consideration of the patient's health in this squabble? Has no one stopped to measure the effects of various levels of these drugs on something other than the corporation bottom line, like, say, oh, the patient, ferinstance?
+8 # NanFan 2013-01-20 13:07
Exactly the bottom line of this article, Sallyport. And pointing a finger at those who do this TO the patients is paramount to getting it stopped. Outing them, as this article has done, is important to showing the web of deceit, no only by congress and Amgen, but also by the doctors who double charge and maybe don't dose the people enough to help them.

Unfortunately, it's like "built-in obsolescence," a core principle of capitalism. Only this time, it's the people who are the product...and they just may die trying to stay alive.

+4 # mdhome 2013-01-20 18:19
Only this time, it's the people who are the product...and they just may die trying to stay alive.

+10 # wwway 2013-01-20 14:54
In America, it has never been about health. It's about profit! Example: At the turn of the 20th century the American Medical Association fought immunization against polio, diptheria, etc because a health population might stand in the way of making money.
+13 # angelfish 2013-01-20 13:32
Isn't ANYONE minding the Store in Washington? God knows that MOST Politicians have their heads firmly implanted in their lower alimentary canals but can't ANY Americans depend on the competence of SOME to make sure the Bad Guys AREN'T winning? What's the Story here? We ALREADY know this company is as crooked as a dog's hind leg, yet they are STILL able to subvert our legislation, insert paragraphs into our Bills and cost us, not only money, but, probably, lives, as well! This is DISGRACEFUL!
+6 # Texas Aggie 2013-01-20 22:22
That the both party leaders (Baucus and McConnell) were in on it makes it difficult for the underlings to do anything, and it also makes it difficult for the underlings to know what is going on until after the fact.
+3 # BobbyLip 2013-01-20 13:37
Move along, folks. Nuthin' to see here.
+18 # vgirl1 2013-01-20 13:49
Just proves once again that programs like Medicare,and yes Medicaid and SS, are not the problem when it comes to our national debt. The problem is the TPGreedy Ole Party who gives away the money in the programs that make up the national safety nets and then blame the safety nets.
+11 # tbcrawford 2013-01-20 14:13
Just curious...Once Medicare and Medical eliminated and Obamacare overturned, how will Big Pharma get paid for their drugs? Only the "One percent" will be able to afford them.
+4 # mdhome 2013-01-20 18:21
They will make it up on the embalming fluid sales.
+5 # wwway 2013-01-20 14:44
The lobbies will be the bain of our legislative existence so long as we put up with it.
+17 # moby doug 2013-01-20 15:06
Baucus, Hatch, and McConnell were also prime movers in the massive Medicare prescription "reform" bill of 2003, which gave away hundreds of billion$ to Big Pharma. I wrote a song to Baucus back then (with help from Gilbert & Sullivan), and the song still applies to him and McConnell and Hatch:

The Pirate of Montana

I am the very model of a modern Blue Dog Democrat
I strike a balance midway between Wall Street and the corporate
I know what Trojan Horses are, am one from nose to cuticle
and in 2003 passed prescription reform
for my many friends pharmaceutical.
From Helena to Washington, I'll always do what should be done,
because you see as Senator I am and always will be one
who takes my many millions from
the capitalist insurance scum.
I am not talking through my hat
when I reassure you that
I am the very model of a modern Blue Dog Democrat

I do all that I can
to screw the common man
as you can see
and hand his hard won wages back
to the masters who have purchased me
I know who I take millions from
my campaign fund's a mighty sum
and now's the time for payback
to my buds the big insurance scum.

I know who I take millions from, and who I am beholding to
and that's why I do all I do
to give the working man a screw.
Rest easy in the knowledge that
I am a very tricky cat
I am the very model of a modern Blue Dog Democrat
+11 # Activista 2013-01-20 15:26
AARP estimates that couple over 65 need (present and rising prices) $250 000 in savings for medical care.
I started Plan B and D - then found that from dozen plus doctors in our town NONE accepts medicare.
Visit to the doctor to RENEW $15 prescription cost $220 - required each 6 months. USA Health care is optimized for maximizing profit - GREED. Start with good young doctors - very efficient at making $$$.
+4 # Dr Peter Sloane 2013-01-20 15:30
There's a great song by Tom Paxton - "I Sold a Hammer to the Pentagon" It's worth a listen. Written a LONG time ago too.
+10 # angelfish 2013-01-20 16:18
+6 # tm7devils 2013-01-20 16:20
Just what I was looking forward to...the latest sequel of the the Three Stooges!
"Moe"(Big business leaders): Self-serving, lack ethics and will do anything for an extra buck.
"Larry"(The lobbyists): Ditto..except will do anything for a buck.
"Curley"(Federal congressmen/wom en): lazy, overpaid, ego-maniacal, with no critical thinking skills and willing to kowtow to Moe and Larry to add a buck to their re-election war chests.
The problem is that this group isn't funny...definit ely aren't patriotic and couldn't give a lick about the well being of the American public...the proof is in their actions - or non-action, as is usually the case.
(P.S. There are some in congress that are worth their salt and try to do the right thing - but they're few and far between and fighting uphill)
+3 # CenterLefty 2013-01-20 19:36
Moby Doug, you really nailed it in that tongue-in-cheek paean to Baucus (& Blue Dog Dems, + McConnell). I can't wait to see your libretto for the whole play -- will it be called comething like "Pirates of No Penance"?
+5 # Texas Aggie 2013-01-20 22:18
This isn't the first, second, third or fourth time that Baucus has been found sleeping with the drug companies. It was obvious from the getgo with the negotiations over Obamacare that he was their "escort."
+4 # kalpal 2013-01-21 07:09
I keep being told that its not possible to bribe our elected officials, yet this action proves that bribery is alive and thriving. Someone was paid to add this into the bill. It did not happen spontaneously as a goodwill gesture to Amgen and a screw you to America's taxpayers.
+3 # Rita Walpole Ague 2013-01-21 10:25
"This is why we are in the trouble we are in." Yep - it's called behavior modification, the rewarding of the type of behaviors wanted to occur, stay firmly in place, and increase. In this and so many other instances, across the 'govt. screws vs. do's', bottom of the barrel era in which we live, the rewards are unceasing to the evil ones, those greed and power addicted, thinking solely of how, in any manner, regardless of how corrupt and totally unethical to keep the $$$$$ flowing into their coffers.

Until we get back into severe punishment mode for 'bad' behavior, and reward mode for good/honest/eth ical behavior, we are doomed. Place to start fixing the totally broken system? I truly believe it's to make sure everyone who is entitled to vote can vote with ease, and to make sure each and every vote is honestly counted, with laws put into place calling election fraud what it is - treason, and punishing it as such.
+3 # ghostperson 2013-01-21 16:19
Containing artificial inflation for Medicare is one of the tools available for reducing program costs.

Looks like cash and carry government is thriving along with those who unnecessarily drive up the costs.

Big Pharma always claims its price increases are due to the expense of R & D.

They spend more on advertising than R & D.

Americans pay 65% of the cost of drugs worldwide but use only 21% of the product.

Literally, we subsidize other countries and multi-national corporations because it has been determined by our corporatist masters that we are the target population whose bones are to be picked clean because they know they have our elected leaders under their financial thumb.

I am sick to death of this dance a duet. Two more years to change a price? Sounds like they are selling us swamp land in Florida.

The contempt that our so-called leaders show for us with their bull shit, half-baked "justifications " for subsidizing Big Business is galling. And the masses are the takers? In a pig's eye.

Why don't they just have open house at the Treasury Department for Big Business and let them walk in and take as much as they want and get it over with. We can't even pretend to believe our elected politicians anymore. They are just absurd.

I would beel more comfortable is they just did a Louisiana: It's politicians don't pretend not to be crooks.
+1 # Working Class 2013-01-22 17:01
"Mr. Hatch's spokeswoman, Ms. Ferrier, said the involvement of Mr. Todd, the former Amgen employee, had not been inappropriate and that dozens of staff members on Capitol Hill handled matters that might benefit former employers"
Is that supposed to make us feel confident that our government has not been bought and paid for?
0 # golferdawn 2013-01-23 15:42
Since this will cost Medicare $500 million - then put the $762 million into Medicare.
0 # Edwina 2013-01-28 10:44
What happened to the idea of a more transparent government? A more accountable government? Thank you, NYT, for uncovering this information. This is a free press at its best. A press we count on to keep government -- and corporations -- in check.

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