Saturday, March 31, 2007

60 Minutes Does Health Care

Our David Hogberg will be watching tomorrow (Sunday, April 1) when CBS's 60 Minutes does a story on, in its words, "how the pharmaceutical industry lobby influenced Congress to pass the Medicare prescription drug law."

The leftie lobby group Families USA, which advocates an expansion of the government's role in health care, is claiming in an e-mail to supporters and others that "part of the program is based on data from the Families USA report, 'No Bargain: Medicare Drug Plans Deliver High Prices.' This report," the Families USA e-mail continues, "shows the huge differences between prices secured by the Department of Veterans Affairs (VA) -- which does bargain for cheaper drug prices -- and the much higher prices charged by all the private drug plans in Medicare Part D."

As the National Center's health care analyst, Senior Policy Analyst David Hogberg, explained in a January press release, the Families USA report 60 Minutes is reportedly relying upon is itself unreliable:
Health Care Expert Condemns New Liberal Report on Medicare Drug Prices

Research used in a new report by the left-of-center group Families USA, apparently meant to bolster House Speaker Nancy Pelosi's effort to give government employees the power to "negotiate" drug prices under Medicare Part D, is being called deceptive by a health care expert from the National Center for Public Policy Research.

"The Families USA report proves the wisdom behind Mark Twain's quip 'There are lies, damned lies and statistics,'" said National Center senior policy analyst David Hogberg, Ph.D.

Families USA's "No Bargain: Medicare Drug Plans Deliver High Prices" purports to compare the drug prices paid by the insurance plans that administer Medicare Part D to those paid by the Veteran's Administration. It claims that drug prices paid under Medicare Part D are much higher than those paid by the VA, in some cases, over 1,000 percent higher.

However, says Hogberg, the report draws its Medicare drug price data from nonrepresentative sources.

As an example of the flawed nature of the Families USA report, Hogberg notes that the Medicare drug price data used in the report to compare Medicare drug costs to the VA's drug costs come from only two counties - Montgomery County, Maryland and Hamilton County, Ohio. Based on median household income, both counties are above the national average. Montgomery County, for instance, is the fourth-richest county in the nation. Since wealthier areas, on average, tend to pay higher prices, Families USA's use of these counties as the source of their sample data all but guarantees that the Medicare drug prices data in their study will be exaggeratedly high.

"I call that cooking the data, pure and simple," Hogberg said. "You also have to dig deep into the Families USA study to learn the VA doesn't 'negotiate' drug prices. The VA pays only 76 percent of the nonfederal average manufacturer price of a drug. That's not a 'negotiation,' that's a price control. So, Families USA has skewed its results by using Medicare data only from wealthy counties and comparing it to prices obtained nationally by the VA, which was imposing price controls."

"I trust that sensible members of Congress and the media will dismiss this study for the nonsense that it is," Hogberg said.

In conclusion, Hogberg added, "In 2003, President George W. Bush signed into law a prescription drug program for Medicare, known now as Medicare Part D, that is administered by private drug companies. It bans Medicare from 'negotiating' directly with pharmaceutical companies. Proponents of government-run health care have long sought to remove this prohibition, but supporters of the ban believe that such 'negotiations' are akin to imposing government price controls, which all-but-inevitably lead to rationing, shortages, and a decline in health care quality."

Hogberg is the author of The National Center for Public Policy Research National Policy Analysis paper, "Letting Medicare "Negotiate" Drug Prices: Myths vs. Reality." The paper is available online at
Since Thursday, David has twice telephoned 60 Minutes, sent the show a fax, and e-mailed its producers to warn them that the Families USA data is "highly misleading."

David advised the show: "I want to emphasize that if you use [the Families USA] report in your segment, in the interest of journalistic objectivity you should have someone on the segment disputing its findings."

David asked that someone from 60 Minutes get back to him, but no one has done so.

He will be watching with interest Sunday evening to see how 60 Minutes presents this data.


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Posted by Amy Ridenour at 10:57 PM

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