Drug-cost ire gives industry a chill

Makers fear `quick fix' through price controls

June 04, 2000|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

WASHINGTON - Drug makers, who for years have successfully resisted government intervention that could lead to price controls on their products, have suddenly become fearful of the political quick fix.

Their wondrous concoctions have saved lives, alleviated suffering and changed the nature of health care by often eliminating the need for surgery and hospitalization.

Pills can lower cholesterol, take the itch out of allergies, make depression bearable and restore sexual function.

But increasingly, longtime Republican friends of the pharmaceutical industry are joining traditional Democratic foes in complaining that these wonder drugs cost too much -at least 50 percent more in the United States than in neighboring Canada and Mexico, and often well beyond the means of those without health insurance.

With election-year pressure for price relief building, lawmakers are scrambling to respond.

"While seniors and health plans, employers, hospitals and others struggle with the growing cost of prescription drugs, the pharmaceutical industry has been among the most profitable U.S. industries," Republican Sen. Slade Gorton of Washington told his Senate colleagues recently in what amounted to a public scolding of the drug makers.

"The current system leaves the drug companies' best customers feeling like they've been ripped off," said Gorton, who faces a stiff re-election challenge.

Prospects for enactment of legislation to address drug prices this year are slim. Time is short, and agreement between factions in Congress elusive.

In addition, members of both parties charge that members of the other are more interested in the appearance of action than in accomplishing anything.

Yet, the drug industry is worried enough that it is going national with a multimillion-dollar advertising campaign against congressional action that had been limited to the states along the Canadian border.

"We are concerned about the political pressure to do something that would be politically expedient, a quick fix that doesn't really solve the problem," said Tim Ryan of Citizens for a Better Medicare, an anti-price-control coalition formed by the pharmaceutical industry to conduct the media campaign.

The ads contend that lower drug prices in Canada are the result of a government-run health care system that discourages the sort of innovation that has produced the miraculous U.S.-made drugs. Quality of care is so poor in that system that Canadians come the United States for surgery and other treatment, the ads say.

"I think Congress is just about to take this up as a larger issue," Ryan said. "As legislative activity increases, we're going to have to step up our activities as well."

Proposed solutions include Gorton's idea of prohibiting drug companies from charging higher prices in the United States than they do elsewhere in the world, allowing U.S. wholesalers to buy U.S.-made drugs at lower prices outside the country for resale here and creating a government agency that would negotiate to buy drugs at bulk discounts for resale to Americans who lack insurance coverage.

Those ideas are offered in addition to the expanding array of proposals for adding a drug benefit to Medicare that would help pay prescription costs for the three of five elderly Americans who have little or no insurance covering drugs.

"We want to make [the drug companies] understand that something has to be done," said James M. Jeffords, chairman of the Senate Health, Education and Labor Committee and co-sponsor of a bill that would allow U.S. wholesalers to import drugs in bulk. Jeffords plans a hearing this month on a bill that he hopes will serve as "at least a shot across the bow."

The Vermont Republican said he expects distress over drug prices to be a hot issue in his campaign for election to a third term in the Senate.

The co-sponsor of his bill is Republican Olympia J. Snowe of Maine. She is seeking re-election this year in a state where the drug-price issue is so hot that the Maine government is trying to negotiate discounted rates for its residents who don't have drug insurance.

Critics frequently point out that the pharmaceutical industry topped Fortune magazine's list of corporate money-makers last year with a profit margin of 18.6 percent, ahead of banks, insurance companies, telecommunications companies and computer-services companies.

Those figures don't take into account the high cost of research and development to produce new miracle cures, most of which ends in failure, according to Jeffrey Trewitt, a spokesman for Pharmaceutical Research and Manufacturers of America, a trade association representing the industry.

Trimming drug profits would cripple the research effort, he said.

The solution, Trewitt argued, lies in expanding access to insurance so that more people have drug coverage.

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