Balancing low-cost drugs vs. free enterprise

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WASHINGTON – What’s a retired person on a fixed income to do?

If you are 85-year-old Lionel Cayer of Fairfield, Maine, you have a choice. Pay $3 a pill at a local drugstore for a daily dose of heart medication to soothe a triple bypass or climb on a bus, travel four hours to the Canadian border, and then fill the prescription for 40 percent less.

Cayer says he gets an even bigger savings on another drug when he travels to St. Stephen, New Brunswick.

“It’s a medication that a doctor injects in your knees when you find you can’t walk,” said the former maintenance engineer at Central Maine Medical Center in Lewiston. “It costs approximately $1,500 per knee here and about $500 in Canada.”

Many seniors around the nation share a similar story. They find themselves plunking down more and more cash as prices go up an estimated 18 percent a year on doctor-prescribed drugs manufactured by U.S. firms.

Still, Cayer counts himself among the lucky.

Bus trips organized by the Maine Council of Senior Citizens have taken him and other seniors to the Canadian border where medicine is cheaper even if the drugs are manufactured in the United States.

That’s because Canada negotiates prices.

That’s not the case in the United States, but prescription drugs may become more affordable as lawmakers eye proposals for a new drug benefit under the Medicare program that now serves 38 million seniors.

At a press conference just before Congress began its August recess, U.S. Sen. Olympia Snowe said she hoped the Senate would prepare legislation as early as mid-September aimed at launching such a program to help with drug costs.

Joined by fellow Republicans on the Senate Finance Committee and Sen. John Breaux, D-La., Maine’s senior senator announced a “road map” for legislation for Medicare reform and a prescription drug plan.

“We are laying this foundation to build momentum,” Snowe told reporters. “There should be no mistake: We cannot truly claim to have modernized Medicare without prescription drug coverage.”

There may be a few speed bumps in the road, however, as lawmakers return from recess today to wrestle with several pending measures, including how to make drugs more affordable. Most expect the debate on affordable drugs to divide Washington over whether costs should be subsidized at taxpayer expense or with massive wholesale buying programs that would give consumers the edge to negotiate prices.

All of Maine’s lawmakers share the same goal in concept, but consensus on the details appears to end there. While Snowe and her group seek a marketplace solution to bring down prices with competition, U.S. Rep. John Baldacci offers a more activist perspective.

“We are the only country in the world that doesn’t negotiate on prescription drug prices,” said Baldacci, a member of the House Prescription Drug Task Force, who bemoans the high prices charged by drug companies even as firms frequently rely on government-paid research to develop new medicines. “We need to be putting pressure on the system because prices are galloping out of control.”

Many states, including Maine, have decided not to wait for Washington to hammer out legislation for a drug benefit. More than 20 states have hashed out programs to deliver lower prices on prescription drugs with bulk purchases for state workers, seniors and the uninsured, a movement that has triggered furious opposition from pharmaceutical firms.

Maine and neighboring Vermont know this all too well. The two are braced for a fight in the Supreme Court over their prescription drug plans designed to lower the purchase price for drugs among the uninsured even as other states work to establish programs based on Maine’s model.

That gives Baldacci more fodder to throw at the drug industry. “This action illustrates, once again, that the pharmaceutical industry is unwilling to compromise and unwilling to be constructive partners in our efforts to help our constituents.”

But the drug industry is worried about Maine’s precedent. If states can form buying consortiums, then the federal government might try the same thing. That would drive a stake through the heart of the industry, which claims it needs a fair return on its established products – and profits to develop new ones.

Against this backdrop, in the quest for more affordable prices, many consumers like Lionel Cayer now cross the borders into Canada or Mexico to fill their prescriptions with FDA-approved products exported by U.S. firms. While the activity of bringing back pharmaceuticals can technically be against the law in some cases, the savings range between half and three-quarters of what U.S. retailers charge.

Among those who can’t travel, there’s always the Internet. The FDA now estimates that as many as 2 million packages were delivered through the mail from other countries last year after being ordered online.

Meredith Art, spokeswoman for the Pharmaceutical Research and Manufacturers of America, a leading industry trade group known as PhRMA, cautions consumers against these alternatives. In Mexico there is the chance of counterfeit drugs being sold and the organization has “safety concerns” about purchases in Canada as well.

“You’re playing with your health,” she said.

Washington lawmakers are divided on the wisdom of reimporting U.S. pharmaceuticals at a lower cost.

Last year, with support from Maine’s congressional delegation, Congress approved legislation that would make the activity legal if sanctioned by then-Secretary of U.S. Health and Human Services Donna Shalala. After deciding quality control of imported drugs could not be enforced, she rejected the idea. The current HHS secretary, Tommy Thompson, seconded that opinion in July.

Still, lawmakers are trying again. A reimport measure received overwhelming support in the House recently with a vote of 324-101 and may be brought up in the Senate this month.

“Members of Congress understood that competition, and open markets are the best way to bring prescription drug prices down,” said Rep. Gil Gutknecht, R-Minn., sponsor of the legislation.

Maine Democrats Baldacci and Rep. Tom Allen supported the measure in the House, but Congress is under heavy pressure from a fusillade of lobbyists representing pharmaceutical interests to shy away from such efforts.

Right now, 625 lobbyists are making the case for drug firms – more than one lobbyist for each of the 535 members of Congress, according to consumer watchdog group Public Citizen, founded by Ralph Nader. Many of them are former members of Congress.

Helping to bolster their influence, pharmaceutical companies also have pitched in tens of millions of dollars to political parties and political campaigns. Even more went into television ads opposing any sort of government effort to negotiate drug prices, according to the Center for Responsive Politics, a nonprofit watchdog group that monitors money and politics.

Some lawmakers believe those sums and expenses could be better spent in cutting the retail price tag on medicine. Adding to their argument, they claim that American taxpayers pay much of the cost for developing new drugs each year because critical research is shared with the drug industry through the National Institutes of Health and other government agencies.

“No other industry is as heavily subsidized by the federal tax dollar,” Allen said. “Millions of our seniors have paid taxes for decades and contributed to the development of new drugs. Now in their retirement, with no Medicare coverage for their medicines, they pay the highest prices in the world.”

Drug firms dispute the amount of research and development money saved on government research and use the thumbnail figure of $500 million as the amount it takes for a company to develop a new drug. Industry critics say the cost is more like $110 million or even half that. The real expense is in the marketing, promotion and advertising, they say.

U.S. Sen. Susan Collins recently requested an investigation into how the cost of advertising and marketing may affect the cost of prescribed drugs. Like other lawmakers, Collins is searching for solutions that will bring down drug costs for seniors.

“I believe that our top priority still should be to modernize Medicare to include a prescription drug benefit,” she said. “However, it is important to further understand the underlying causes of the price differences of prescription drugs and perhaps arrive at a consensus about some potential solutions.”

As far as Snowe is concerned, the clock is ticking, not only for those who are paying more for needed medicine, but also for Congress to do something. Once lawmakers begin thinking about the 2002 election, the chances for having any Medicare drug benefit passed into law will become slimmer and slimmer. If nothing gets done, everyone will lose in the end, she said.

“If we don’t enact this legislation this year,” Snowe said, “we are all going to be painted with the broad brush of failure.”

In the meantime, expect to see Cayer and other seniors heading toward the Canadian border from time to time to fill up on their prescriptions.