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Jewish World Review July 16, 2002 / 7 Menachem-Av, 5762

Morton Kondracke

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Consumer Reports

War on drug firms will hurt elderly | Democrats pride themselves on being defenders of the sick and elderly, yet their jihad against pharmaceutical companies is likely to hurt those very groups.

As the Senate prepares to debate rival Medicare prescription drug benefit proposals next week, the lead Democratic bill almost certainly would lead to government price controls and reduced investment in innovative and life-saving new medicines.

In addition, Democrats plan to offer a series of amendments designed to reduce drug costs. One would allow mass importation of U.S.-made drugs from Canada, in effect imposing that country's price controls in the United States.

Another proposal would limit the tax deductibility of drug company advertising expenses, and one more would narrow current patent protections.

Rhetorically, Democrats are attacking drug companies in terms formerly reserved for tobacco companies and gun manufacturers, whose products are inherently lethal. In House debate last month, for instance, Minority Leader Richard Gephardt (D-Mo.) declared that the Republican drug bill "was written by the pharmaceutical companies. It is time to take the money-changers out of the temple of government of the people."

Worst of all, Democrats apparently have decided to use prescription drug coverage for seniors as an election year wedge issue rather than working out a deal with Republicans to enact a real benefit.

Republicans, too, are using the issue politically -- providing themselves "cover" by backing legislation they know is unacceptable to Democrats.

Both sides repeat the mantra that "seniors are being forced to choose between eating and buying medicines," but the simplest way to eliminate the cruel choice would be to pass a benefit that would help the elderly buy drugs.

But the legislation should not inhibit development of drugs that will keep people alive -- such as Xigris, the end-product of more than $2 billion invested by companies to conquer sepsis, the chronic infection that kills 225,000 Americans each year. Or several new medicines promising to cure macular degeneration and diabetic retinopathy, which cause blindness and afflict 4 million people. Or Gleevac, a new medicine for leukemia. As the Senate debate begins, Democrats are lined up behind a bill sponsored by Sens. Bob Graham (D-Fla.) and Zell Miller (D-Ga.) expected to cost about $1 trillion over 10 years that would almost certainly lead to government price controls on drugs.

The Medicare system now rigidly regulates standards and prices for thousands of medical services and devices -- from doctor visits to surgical procedures to wheelchairs.

As the Graham bill is written, it would ultimately do the same for drugs. Congress and the Center for Medicare and Medicaid Services sometimes make drastic errors in setting reimbursement rates, causing hospitals to go out of business, doctors to refuse Medicare patients and HMOs to drop service.

The same could easily happen with prescription drugs -- with disastrous results for research. Drug companies well might find inventing drugs for the aged too risky and focus on younger peoples' diseases.

In an interview, Sen. Debbie Stabenow (D-Mich.), one of the chief sponsors of several drug pricing measures, said she wasn't worried about hurting innovation. "Drug companies make 18 to 20 percent profits, the highest of any industry in America. They spend 2.5 times more on advertising than on research.

"We give them patent protection for up to 20 years, which limits competition. I support that, but then they try to limit generics from coming on the market.

"And so the bottom line is that Americans pay the highest prices in the world. I think there needs to be some pushback so Americans are in the game here."

There is evidence that major drug companies are using loopholes in patent law to extend patent life and delay competition, but Democrats are not waiting for an upcoming Federal Trade Commission study on the subject before moving to amend the law.

Meanwhile, drug industry spokesmen say that companies spent $30.3 billion last year on research and only $16 billion on advertising and marketing. They say drugs are expensive -- and profits need to be high -- because the average cost of bringing a drug to market is $800 million over a 12- to 15-year period. Only a fifth of drugs tested in clinical trials actually make it to market, they say.

There is a small chance -- 20 percent or less -- that a compromise could be reached on drugs for seniors this year if a leading liberal such as Sen. Edward Kennedy (D-Mass.) were to negotiate with sponsors of the so-called "tripartisan" bill scheduled for introduction this week.

That measure, sponsored by Sens. John Breaux (D-La.), Chuck Grassley (R-Iowa), Jim Jeffords (I-Vt.) and others, costs $370 billion over 10 years and empowers private prescription benefit managers to negotiate prices with drug companies the way they do for private insurance companies.

To reach a compromise, though, Republicans would have to agree to spend more money. If they balked, that would give Democrats a legitimate issue to take to the voters.

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JWR contributor Morton Kondracke is executive editor of Roll Call, the newspaper of Capitol Hill. Send your comments by clicking here.

© 2001, NEA