In a letter yesterday to GAO, Reps. Henry Waxman (D-Calif.), Charlie Rangel (D-N.Y.), Pete Stark (D-Calif.) and John Lewis (D-Ga.) voiced concerns that the companies are “artificially raising prices for certain pharmaceutical products in expectation of new reforms that could otherwise reduce prescription drug prices or price growth by encouraging patients and the government to be more efficient purchasers.”

Any price gouging is unacceptable, but anticipatory price gouging is especially offensive. We request that the GAO prepare on an expedited basis a report that analyzes recent trends in prescription drug pricing. In addition, we request that you prepare a proposal to ensure ongoing monitoring of pharmaceutical manufacturer pricing practices, and periodically report to the Congress on your findings.

Not that the pharmaceutical industry is taking the Times’ report sitting down. In a statement released Monday, Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America, said the price increases represent “the natural result of market forces.”

[W]e determined that LRP is generally more cost-effective and timely than U.S. in-kind food aid … However, certain legal requirements for U.S. food aid, such as the requirement to procure only U.S.-grown agricultural commodities and to transport those commodities on U.S.-flag vessels, known as “cargo preference,” may constrain U.S. agencies’ use of LRP.

Strangely enough, the grown-domestic mandate was one that President George W. Bush tried to reform for years, proposing that 25 percent of U.S. food aid be bought closer to the crises abroad. Congress, behind powerful farm-state lawmakers dead-set on protecting their regional industry, shot him down every time.

Not that the Obama administration isn’t aware of the problem. The U.S. Department of Agriculture is expected to release new LRP guidelines soon.

After studying Medicaid claims in five states — California, New York, North Carolina, Illinois and Texas — GAO found more than 1,800 cases, between fiscal years 2006 and 2007, when Medicaid paid to fill controlled substance prescriptions for patients who had already died. The tab totaled more than $200,000, GAO said.

Additionally, GAO found, Medicaid paid more than $500,000 in those same states to filled similar prescriptions “written” by more than 1,200 physicians who had died beforehand.

Some of the most commonly abused medications, GAO found, included OxyContin, Ambien, Ritalin and Valium.

The report worked its way into today’s health reform debate in the Senate Finance Committee. Sen. Charles Grassley (Iowa), the panel’s senior Republican, said the findings were clear indication that identity theft is a problem in Medicaid. Grassley was urging passage of his amendment requiring potential Medicaid patients to show photo IDs in order to enroll in the program.  No dead person, Grassley argued, can produce an ID.

But Sen. Jeff Bingaman (D-N.M.), a former state attorney general, countered that the Medicaid fraud involving dead folks most often originates with providers trying to get paid for nothing, not patients trying to get free care. “The fraud in Medicaid is provider fraud,” Bingaman said.

The Grassley measure failed along party lines.

Democrats are trying to move away from fee-for-service Medicare, aiming instead to create a system that pays for the quality and outcomes of health services, rather than the mere volume of them.

This week those lawmakers got a little push. The Government Accountability Office on Monday issued a report finding that over-prescription of some medical procedures are inexplicably endemic to certain regions of the country, suggesting that care regimens are influenced by a nebulous medical culture that differs from place to place. “[C]ertain types of physician services, such as advanced imaging and minor procedures, are performed more frequently in potentially overserved areas relative to other areas, suggesting differences in physician practice patterns,” GAO found.

[P]otentially overserved areas had 44 percent more minor procedures — which include services such as ambulatory procedures, eye procedure treatments, and colonoscopies — per 1,000 beneficiaries than other areas. Potentially overserved areas also had 29 percent more laboratory tests and 19 percent more imaging services per 1,000 beneficiaries than other areas.

The agency defined “potentially overserved areas” as those “in the top half in both the level and growth in utilization of physician services.” Importantly, increasing the number of procedures doesn’t produce tangible health benefits for the patients on the receiving end, GAO found.

The findings weren’t lost on Sen. Max Baucus (D-Mont). The Senate Finance Committee chairman is leading the effort to transition Medicare’s payment system away from fee for service. In a statement issued Monday, Baucus said the GAO report is just further evidence that that transition is necessary.

This report makes clear that serious work remains in determining why the use of certain services under Medicare – like imaging and minor procedures – is much higher in certain parts of the country than others, irrespective of a patient’s real need, health status or the availability of doctors.

Moreover, the potential abuse and excessive spending revealed in this report is further evidence the status quo of rising health care costs is unacceptable for America’s seniors and the long-term fiscal health of the Medicare program.

Baucus’s health reform bill attempts to tie more physician and hospital payments to performance surrounding a number of quality measures.

Just days after issuing findings that thousands of guns are being funneled illegally into Mexico, the Government Accountability Office reported that, in the last five years, folks known to be on the FBI’s terrorist watch list have tried to purchase weapons on 963 occasions — and succeeded 865 times.

The reason is simple: There’s no law against it. From the report:

Under current law, there is no basis to automatically prohibit a person from possessing firearms or explosives because they appear on the terrorist watch list. Rather, there must be a disqualifying factor (i.e., prohibiting information) pursuant to  federal or state law, such as a felony conviction or illegal immigration status.

Last month, New York Democratic Reps. Carolyn McCarthy and Steve Israel introduced a bill that would prevent those found to be on the Transportation Security Administration’s terrorist no-fly list from buying guns. The powerful gun lobby, however, opposes the concept of keeping Second Amendment rights from suspected terrorists.

The report found that 87 percent of guns seized by Mexican authorities and traced by the Bureau of Alcohol, Tobacco and Firearms in the last five years originated from the United States. The critics, however, say the findings are misleading because (1) a majority of guns confiscated in Mexico are never submitted to be traced by the ATF, (2) many of the U.S.-made guns are turning up, not because they’re being smuggled, but because Mexican soldiers are being recruited (with their old, U.S.-made guns) into the more lucrative world of the drug cartels, and (3) some of the semi-automatic weapons that GAO describes as “high-powered” are actually better suited “for shooting prairie dogs and other varmints.”

In this maelstrom arrives a fascinating piece by Mike Melia of the Associated Press, who reported over the weekend that roughly 80 percent of the crime guns seized and traced by Jamaican authorities also originate from the United States — similar findings coming from another independent analysis of another crime-ridden developing country in close proximity to the United States.

Unlike in Mexico, the vast majority of Jamaican guns seized are submitted for tracing.  Jamaica and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives find most of the seized weapons come from three Florida counties — Orange, Dade and Broward — all with large Jamaican populations, according to [Mark Shields, Jamaica's deputy police commissioner].

So there goes the GAO critics’ first argument. U.S. small-arms sales to Jamaica’s tiny military are spare, so the second argument doesn’t hold up very well either. As for the third, well, it’s doubtful that Jamaica has much of a prairie dog problem. Rather, Melia writes that Florida’s “lax” gun laws have simply made it easy for smugglers to buy U.S. weapons and traffic them to the Caribbean.

The U.S. and Jamaica both prohibit the unlicensed transport of guns. But like Mexican smugglers, Jamaican ones depend on lax U.S. gun laws, corrupt customs inspectors and front men acting as buyers. Florida gun laws make it relatively easy to buy a legal firearm, and much of the smuggling is done by family and friends, said Shields, the Jamaican police official.

The results are grisly. “With arsenals to rival police firepower,” Melia writes, “the gangs are blamed for 90 percent of the homicides in Jamaica — 1,611 last year, about 10 times more than the U.S. rate, relative to population.”

Of 30 rifle magazines recently taken from insurgents’ corpses, at least 17 contained cartridges, or rounds, identical to ammunition the United States had provided to Afghan government forces, according to an examination of ammunition markings by The New York Times and interviews with American officers and arms dealers.

The presence of this ammunition among the dead in the Korangal Valley, an area of often fierce fighting near Afghanistan’s border with Pakistan, strongly suggests that munitions procured by the Pentagon have leaked from Afghan forces for use against American troops.

Chivers surmises that the ammunition has been diverted, probably by Taliban-complicit elements within the Afghan training effort. The Government Accountability Office has criticized U.S. oversight with providing rifles to the Afghan security forces. It’s worth remembering that this happened in Iraq as well.

Under the bill, the Government Accountability Office (GAO) would be given access “to any information, data, schedules, books, accounts, financial records, reports, files, electronic communications, or other papers, things, or property belonging to or in use by the TARP.”

In a statement, Grassley explains the rationale behind the proposal:

In the bill that established the $700 billion rescue operation, Congress said the GAO had to conduct a regular review of how things were going, but Congress didn’t make sure the GAO would have access to the kinds of information it needs to really assess how the money is being used and the effectiveness of how the money is distributed.  This bill would close that gap and enable the GAO to conduct a more thorough review.

The House passed a TARP oversight and reform bill earlier this month, but Senate Democrats never considered it. Instead, upper-chamber leaders decided that a three-page letter of promises from the Obama administration would suffice. (Baucus and Grassley have just weighed in that they disagree.)

The Senate released the second $350 billion of bailout funding at Obama’s request this month.

Incorporate.

The Government Accountability Office released a report today indicating that 83 of the 100 largest U.S. corporations — including many that are benefiting from Washington’s many taxpayer-funded bailouts — operate subsidiaries in countries known to be tax havens. Additionally, 63 of the 100 largest publicly-traded federal contractors have similar subsidiaries in the same spots, according to the report.

And that might not be all.

According to the GAO:

[T]he SEC only requires public corporations to report significant subsidiaries, so the number of subsidiaries in jurisdictions listed as tax havens or financial privacy jurisdictions for each corporation or federal contractor may be understated in this report.

Browsing the list of companies, you’ll find many of the same names we’ve heard in recent months connected to federal bailouts. For example, American International Group, which was bailed out last year to the tune of roughly $150 billion, has 18 subsidiaries in eight tax-haven countries, including Bahrain, Switzerland and Bermuda, the GAO found.

Bank of America — which received a $138 billion lifeline today, on top of $15 billion it’s already received under the Wall Street bailout (not to mention $10 billion injected into Merrill Lynch ahead of its acquisition by BoA) — operates 115 subsidiaries in 11 tax-haven countries, including Gibraltar and the Cayman Islands.

The list goes on.

So what does it mean? Well, it appears that these corporations are begging for taxpayers to bail them out for the bad investment decisions they made, while at the same time skirting their tax obligations to the United States. (I say “appears” because the GAO concedes that subsidiaries may be established in listed jurisdictions for a variety of nontax business reasons.” Still, for what other reason would Citigroup care to house operations on Aruba and the Isle of Man?).

Some lawmakers are asking the same question. Sens. Byron Dorgan (D-N.D.) and Carl Levin (D-Mich.), who requested the GAO report, plan to introduce legislation “to shut down these tax dodgers,” as Dorgan said in a statement:

This report shows that some of our country’s largest companies and federal contractors, many of which are household names, continue to use offshore tax havens to avoid paying their fair share of taxes to the U.S. And, some of those companies have even received emergency economic funds from the government.

The companies, in the past, have argued that the U.S. tax code is over-burdensome, forcing them to operate in tax havens to remain competitive. Levin points out that that’s not always the case:

[N]ot all large U.S. companies are major tax haven users and there is great contrast between competitors. For example, Pepsi has 70 tax haven subsidiaries, while Coca Cola has 8; Morgan Stanley has 273, while Fannie Mae has 0; and Caterpillar has 49, while Deere has 3.

The lawmakers estimate that tax shelters cost the federal Treasury $100 billion each year.

Though Obama didn’t vote for it because he was on the campaign trail — and he maintained that the bill was “far from perfect” — he issued a statement expressing his support and accusing opponents of “saying no to America’s farmers and ranchers.”

Under the bill, individuals earning up to $750,000 in farm income and $500,000 in non-farm income are eligible for federal “help.” That means that a farming couple could make as much as $2.5 million in a year and still receive taxpayer subsidies.

One distinction to be made: Obama’s criticism of the program — as reported by the Government Accountability Office this week — stems from abuses under the bill, not the bill itself. That is, the GAO found that folks earning higher than the income threshold were still receiving payments. It’s an easy thing to criticize. The question is, how far would a President Obama go to change that income threshold altogether?