Health care task force may suggest review board to monitor drug prices

May 17, 1993|By New York Times News Service

WASHINGTON -- Instead of imposing controls on drug prices, President Clinton's health care task force may suggest forming a review board to help keep prices down.

The board would be loosely modeled after a Canadian agency that has helped control prescription drug prices in that country, according to confidential work papers obtained from the Task Force on National Health Care.

The Canadian agency, the Patented Medicine Prices Review Board, has helped slow the rise of drug prices in Canada, according to a recent congressional study.

But under heavy lobbying by the drug industry, the administration has apparently backed away from the idea of trying to impose rigid, legally binding controls on drug prices. Prominent Democrats, including Senate majority leader George J. Mitchell, also have expressed distaste for price controls in general.

The paper suggests that a drug price review board would collect data on drug prices and manufacturing costs and could, through "adverse publicity," put pressure on a company to reduce prices.

"Under this option," the papers say, "the board would collect information about prices, and it would establish guidelines as to a reasonable price for prescription drugs that have no therapeutic alternative. It would have the authority to publicly condemn any companies that violated the guidelines."

Rep. Pete Stark of California, chairman of the House Ways and Means Subcommittee on Health, has introduced a bill to create a board similar to the Canadian model.

Drug companies dislike the idea of a price review board, fearing it would gain access to confidential data on their research, marketing, promotion and other costs. Moreover, they worry that after creating a board with limited authority, Congress might later give it power to set prices.

President Clinton has not made a decision on such a review board, nor has he decided how to prevent drug companies, doctors, hospitals and other suppliers from raising prices during the transition to a new health-care system, which could take three to five years.

The White House says the health-care proposal, originally scheduled to be issued May 3, will not be unveiled before mid-June.

Sen. David Pryor, D-Ark., said it was reasonable for the government to restrain drug prices because manufacturers would get a windfall when millions of people gain insurance coverage for drugs under Mr. Clinton's plan.

But Kevin Colgan, a spokesman for Merck & Co., said his company saw no need for a government agency to review drug prices. "The vast majority of new drugs are responsibly priced," he said in an interview. "When somebody sets an outrageous price, there are plenty of public interest groups and elected officials who can focus attention on it."

Last month, Merck proposed a voluntary system of price restraints, enforceable through contracts between drug manufacturers and the federal government. Merck suggested that companies be given the opportunity to sign such a contract "rather than be forced into mandatory legislative government price controls."

Under the Merck proposal, the average of the price increases for all of a company's prescription drugs could not exceed the general rate of inflation, measured by the Consumer Price Index.

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