August 2, 1911--Medicare Part D
Merck last week announced it would lay off an additional 13,000 workers. Nothing so new about that. The pharmaceutical giant since 2009 fired 20,000 others.
These massive retrenchments have added significantly to cuts in general among big pharma companies. The American drug industry since 2000 has cut 299,000 jobs.
This is not because they have been losing business. They continue to be highly profitable in part because along the way have been outsourcing more and more of their production to China. So I suppose, Republicans are right--big profit makers such as Merck have in fact created jobs. But they have their geography wrong--the hiring has been overseas, not in the U.S.
When questioned about the latest round of firings, Merck blamed it on Obamacare. They claimed that his health care bill will cut funding for Medicare Part D, which up to a point pays for seniors' prescription drugs. This, they allege, will mean less money for them and will, in the words of a company spokeman, have "a devistating effect on American jobs." (See linked New York Times article.)
They got part of the story right--it will have a devastating effect on American jobs. Not Chinese.
But the rest of their explanation is bogus.
Obamacare will not reduce seniors' ability to purchase the drugs they need. Quite the contrary. It will phase out the Donut Hole in the current program, which can cost Medicare recipients thousands of dollars a year for their drugs. When the new policy is fully implemented, low-income older citizens will no longer have to choose between paying for food or prescription drugs. They will be able to buy both.
Thus, companies such as Merck will actually see sales and profits increase. This is why they supported the Affordable Health Care Act as it was working its way through Congress--they saw the opportunity to make more money.
The actual reason Merck has laid off so many employees is because of its $14 billion purchase of drug giant Schering-Plough. As is true in mergers and acquisitions of this kind, these deals pay for themselves by combining two companies into one and restructuring them in ways that allow the new, mega-organization to save billions in operational costs, mainly by laying off workers.
By firing as many people as they planned to do when they bought Schering (note the past tense planned), Merck projected savings of more than $4 billion a year. That's how they saw the purchase paying for itself.
This is the real reason for the layoffs--not Obama's non-plan to cut Medicare Part D. But as long as people are inclined to be susceptible to manipulation, blaming everything they don't like on Obama (or by simply lying, as in Merck's case), the real culprits will be able to continue to wiggle off the hook.
These massive retrenchments have added significantly to cuts in general among big pharma companies. The American drug industry since 2000 has cut 299,000 jobs.
This is not because they have been losing business. They continue to be highly profitable in part because along the way have been outsourcing more and more of their production to China. So I suppose, Republicans are right--big profit makers such as Merck have in fact created jobs. But they have their geography wrong--the hiring has been overseas, not in the U.S.
When questioned about the latest round of firings, Merck blamed it on Obamacare. They claimed that his health care bill will cut funding for Medicare Part D, which up to a point pays for seniors' prescription drugs. This, they allege, will mean less money for them and will, in the words of a company spokeman, have "a devistating effect on American jobs." (See linked New York Times article.)
They got part of the story right--it will have a devastating effect on American jobs. Not Chinese.
But the rest of their explanation is bogus.
Obamacare will not reduce seniors' ability to purchase the drugs they need. Quite the contrary. It will phase out the Donut Hole in the current program, which can cost Medicare recipients thousands of dollars a year for their drugs. When the new policy is fully implemented, low-income older citizens will no longer have to choose between paying for food or prescription drugs. They will be able to buy both.
Thus, companies such as Merck will actually see sales and profits increase. This is why they supported the Affordable Health Care Act as it was working its way through Congress--they saw the opportunity to make more money.
The actual reason Merck has laid off so many employees is because of its $14 billion purchase of drug giant Schering-Plough. As is true in mergers and acquisitions of this kind, these deals pay for themselves by combining two companies into one and restructuring them in ways that allow the new, mega-organization to save billions in operational costs, mainly by laying off workers.
By firing as many people as they planned to do when they bought Schering (note the past tense planned), Merck projected savings of more than $4 billion a year. That's how they saw the purchase paying for itself.
This is the real reason for the layoffs--not Obama's non-plan to cut Medicare Part D. But as long as people are inclined to be susceptible to manipulation, blaming everything they don't like on Obama (or by simply lying, as in Merck's case), the real culprits will be able to continue to wiggle off the hook.
posted by Steven Zwerling at
5:00 AM
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