Paying for drugs

Maine has a front-row seat on one of the few major decisions Congress is likely to make this session. The rising cost of prescription medicine has made a prescription drug program for the elderly an important goal for both parties and the White House, and Maine members of Congress have responded with proposals that would create one. The underlying question about such a program is, Who will pay for it?

That’s not an easy question to answer, because providing any sort of Medicare-based drug program will have a multitude of effects on the way drugs are researched, marketed and sold. Even as Congress maneuvers carefully in this area, the need for more affordable medicines becomes ever more clear. Congress has taken ample testimony from seniors forced to choose between medicine and food because they cannot afford both. It has done its own research into the disparity of costs the drug companies preferred customers pay and what seniors pay. It has seen the rising number of Americans going to Canada to buy the same drugs offered at U.S. pharmacies, only they are 30 or 40 percent less expensive north of the border.

Proposals by Sen. Olympia Snowe and Rep. Tom Allen take opposite approaches to the problem. Sen. Snowe’s plan would have the government pay for all or some of a drug premium, with a small co-payment, based on income. Rep. Allen advocates a free-market approach, with the government acting as an HMO to negotiate a discount with pharmaceutical companies. Neither plan is perfect — Sen. Snowe’s does little to prevent price increases; Rep. Allen’s may not do enough for seniors close to poverty. The more attractive aspect of Rep. Allen’s bill, however, is that it goes directly to the problem of rising prices that have made pharmaceutical companies so admired on Wall Street.

The Allen bill is not about controlling prices, as drug lobbyists, Phrma, charge, but about stopping drug companies from using Medicare consumers as piggy banks to compensate for the lowered profits from the deals they cut with HMOs. Phrma is spending enthusiastically on an advertisement campaign against the Allen bill, as if the as if this notion of the government acting to protect tax dollars is somehow un-American.

Some sort of marriage between the Allen and Snowe proposals may be in order. A stronger bill would eliminate premiums for seniors approaching poverty, as Sen. Snowe’s plan does (those at the poverty level or below are covered by Medicaid), and would provide discounts for everyone through the kind of price negotiation in Rep. Allen’s bill. Such a plan would protect the poorest, stop the drug companies from counting on seniors for huge profits and still require the government to spend tax dollars sparingly. The higher drug utilization that would result from such a plan should even comfort the shareholders of the pharmaceuticals.

Long term, the answer of who will pay for prescription is everyone. Short term, Congress has a chance to correct a growing problem for the nation’s elderly.