The Obama administration’s mandate that all health insurance companies must provide coverage for contraceptives has set off an explosive debate about religious freedom and women’s health issues. The attention has been focused on the administration’s insistence that religious institutions, such as Catholic hospitals and schools, would be required to offer the benefit for their employees, even though it contradicts church teaching. But completely ignored is the more fundamental problem: this mandate is not only about the bedroom, it’s about the boardroom. You’ve heard of crony capitalism? Well this is America’s first example of crony contraceptives.
Forget for a minute the religious question and look at who wins big here: Big Pharma. This mandate is not really about condoms or generic versions of “the pill,” which are available free or cheap in lots of places. This is about brand-name birth control drugs and other devices that some consumers swear off because they are too expensive. The Health and Human Services (HHS) mandate requires health-insurance companies provide contraceptive coverage for all “FDA approved contraceptive methods.” It does not insist on generics. And it does not offer any cost containment.
What’s more, the mandate prevents health-insurance companies from having copays or deductibles for the benefit. This is the perfect set up for Big Pharma. Since the drugs will be paid for by a third party (insurance companies, who will pass the cost on to employers and the rest of us), the consumer won’t worry about the price. Expensive brand names will no doubt see demand rise. Ask more health-care analysts why the cost of medical services continues to rise so rapidly and near the top of the list is the fact that a third-party payment system won’t contain costs.
Back in 2009, many observers were surprised when Big Pharma came out in favor of President Obama’s health-care reform bill. The industry spent millions running television ads in favor of the law and industry lobbyists pushed hard for it. One important reason they did so was the promise that with the new law they would have a new market of millions of new customers. The contraceptive mandate is a perfect example.
It’s important to point out that among President Obama’s biggest financial backers are precisely the Big Pharma companies who benefit from the mandate. Sally Sussman, head of government affairs for Pfizer, is one of his biggest campaign bundlers, who co-hosted a fundraiser for Obama on Thursday night. Pfizer sells numerous contraceptives that now must be covered by health-care plans. Obama’s financial ties to the pharmaceutical industry run deep. During the 2008 presidential campaign, he collected three times more in contributions from pharmaceutical manufacturers than John McCain, according to the Center for Responsive Politics. And he will no doubt win the money race again during this election cycle. President Obama’s not the only one who has mandated certain health-care requirements for the benefit of companies with which he has close ties. Back in 2007, Texas Gov. Rick Perry signed an executive order that required school girls in Texas be vaccinated with Gardasil, which fights against a sexually transmitted virus linked to cervical cancer (the full cost of the three-shot vaccine is $360). Again, forget the culture war politics for a second. Instead of looking at the bedroom, follow the money to the corporate boardroom: Gardasil is produced by pharma giant Merck, whose chief lobbyist in Texas at the time had been Perry’s chief of staff. Merck was a campaign contributor, and had also made contributions to the Republican Governors Association while he headed that organization. Again, a corporation supports a politician who in turn issues a mandate that creates a bigger market and larger profits for its product.
Back in the nation’s capital, Big Pharma has spent a lot of money over the past couple of years, keeping an army of lobbyists employed. As Tim Carney of the Washington Examiner pointed out last year, since the Obama administration took office, “the drug industry’s $635 million in lobbying exceeds that of Wall Street and the oil and gas industry, combined.” And the lesson seems to be clear: it is money well spent. Not only did they get largely what they wanted from Obama’s health-care-reform law (no caps on drug prices, no reimportation from Canada); now, President Obama’s mandate is broadening the market for their products. With drug prices so high, the best way it can increase demand for its products is to get the federal government to mandate payment for it.
Now Republicans are trying to roll back some aspects of Obamacare. On Thursday, the Senate voted down a GOP amendment that would have given employers the right to withhold insurance coverage for any health-related service they found objectionable on religious grounds. Even if the Blunt amendment had passed, Pharma would still do well. The industry has plenty of friends on the Republican side of the aisle.
So welcome to the world of crony contraceptives, which means good times for both the bedroom and the corporate boardroom. Follow the money seems like good advice, even when it comes to some of these thorny social issues.