Drugmaker's $500 million 'gift' in fiscal cliff deal should be killed
Back in December, the nation’s attention was focused on the serious economic damage that could come if the nation went over the “fiscal cliff.” That congressionally manufactured crisis involved automatic spending cuts hitting at the same time as tax increases, which would weaken the economy, risking another recession.
Congress and President Barack Obama agreed that the cliff threat needed to be avoided. After some frantic back-and-forth negotiations between the White House and House Republicans, a stopgap measure was passed, allowing the Bush-era tax breaks to remain for all but the wealthiest and putting off spending cuts for three months.
For much of the nation, there was a sigh of relief, even if it was clear that Congress had just kicked most of the problems down the road a few months.
But while the nation felt relief with Congress finally finding a way to avoid the fiscal cliff, there was a small group of people very happy about the cliff-avoiding deal.
The pharmaceutical giant Amgem was very happy with a barely noticed loophole quietly snuck into the Dec. 31 must-pass cliff deal that will make the company an extra $500 million.
That half-billion-dollar reward can be seen as the benefit of being well connected in Washington.
The Amgen loophole provides two more years of price protection for an Amgen drug used by patients on kidney dialysis. Looming Medicare price controls were set to reduce the profitability of the Amgen drug.
After news of the Amgen loophole emerged, Rep. Peter Welch, D-Vt., introduced a bill to reverse the sweetheart deal. His efforts deserve support.
It’s easy to see how Amgen was able to get the lucrative loophole included in the fiscal cliff bill, given that the company has 74 lobbyists. That army of lobbyists, including two former top staffers to Sens. Max Baucus and Mitch McConnell, certainly helps the company advance its interests in Congress.
Amgen also was helped by the fact that a current top aide to Sen. Orin Hatch, R-Utah, who sits on the Senate Finance Committee with Baucus and McConnell, once worked as a policy analyst for Amgen.
One observer said the Amgen loophole story can be traced to the “golden revolving door” between Congress and big corporations.
Speaking about the Amgen loophole, Welch said the insider deal “confirms the American public’s worse suspicions of how Congress operates.”
He’s right.
Seeing a well-connected special interest — Amgen is the world’s largest biotechnology company — take advantage of a looming financial crisis reinforces the idea that Washington is little more than an insiders game of favor-granting in exchange for campaign contributions.
The Amgen loophole is another example of special interests gaming the system — it should be removed.
