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He's whole-hog for cheap drugs

A Minnesota congressman says an open market would even out prescription prices.

By SARA FRITZ, Times Staff Writer
Published February 12, 2004

WASHINGTON - It's not surprising that pig imports caused Rep. Gil Gutknecht to become Congress' leading Republican crusader against high prescription drug prices.

Gutknecht, whose Minnesota district is known for producing pigs and Spam, the canned lunch meat, says he had an epiphany about drug pricing during a telephone conversation with a top official at the Commerce Department a few years ago.

Told that the U.S. government could do nothing to control cheap pig imports from Canada, Gutknecht recalls: "All of a sudden a light bulb went off over my head and I said, "You mean we have free markets when it comes to pork bellies, but not when it comes to Prilosec?' And he chuckled on the other end of the phone and said, "Well, that's right."'

Since then, Gutknecht, a high-energy conservative with a strong independent streak, has sided with Democrats, defying leaders of his own party, including President Bush, by advocating reimportation of lower-priced, U.S.-made drugs from Canada.

As he sees it, every free-trade Republican should support reimporting U.S. drugs from Canada. He says trade barriers allow the pharmaceutical companies to charge much higher prices for their product in the United States than in other countries.

"Pharmaceuticals are treated differently than virtually any other product," Gutknecht said. "And the question economists should ask is, "Why? What is so special about pharmaceuticals, other than the fact that they have enormous political power in this country?' ... You can't hold markets captive if you believe in conservative free market principles."

If cheaper imports could be purchased legally in the United States, Gutknecht says, prices would even out around the world. He estimates it would mean at least a 30 percent or $60-billion cut in the total annual U.S. expenditure of $200-billion for pharmaceuticals.

Already, Gutknecht's crusade has had results. Last year, the Republican-controlled House passed a drug reimportation bill he cosponsored with Democratic Rep. Rahm Emanuel of Illinois that was opposed by the president and the GOP leadership. Recently, he says, Sen. John McCain, R-Ariz., chairman of the Commerce Committee, decided to push the bill in the Senate this year.

Congress has passed bills opening the Canadian border to drug reimportation, but only if the Food and Drug Administration agreed. Under both the Clinton and Bush administrations, the FDA overruled Congress for safety reasons.

Gutknecht thinks Bush's opposition to drug reimportation could cost the president re-election next November.

"This is a powerful political issue - powerful," he says. "If (Bush's advisers) thought Florida was tough for them before, wait until they meet up with millions of angry seniors."

Selling common sense

When Gutknecht (pronounced GOOT-neck) joined the House in 1995, he was seen as a predictable conservative, part of the Republican takeover that put Newt Gingrich in charge.

But he does not think like an ideologue.

Perhaps that's because he represents a swing district centered in Rochester, Minn., home of the Mayo Clinic, that voted for Bill Clinton in 1992 and 1996, and then for George W. Bush in 2000. Thus he tempers his traditional conservatism with what he calls common sense.

At heart, however, he is a fast-talking salesman. Before serving in the Minnesota legislature, he sold school supplies and worked as an auctioneer.

Gutknecht is not an economist. He relies heavily on advice from a few economists and other experts.

But economists do not scare him. In late January, Gutknecht took on Nobel scholar Milton Friedman, the famous conservative economist now in his early 90s, in a debate about drug marketing in San Francisco.

James Glassman, a conservative economic writer who served as questioner at the debate, says Gutknecht is guilty of "quasidemagoguery." He acknowledged the congressman's arguments were "pretty powerful on the surface," but added: "I don't think he engaged the more sophisticated economic issues."

Nevertheless, a growing number of Republicans and Democrats who now favor reimportation - such as Rep. Ginny Brown-Waite, R-Brooksville - turn to Gutknecht for guidance. Brown-Waite says Gutknecht has been "head and shoulders above anybody else on the reimportation issue because he has spent a lot of his political capital on it."

Earned reputation

By seizing the issue of reimportation, Gutknecht has challenged the most powerful lobby in Washington: the pharmaceutical industry.

The industry may be powerful, he says, but a recent poll shows 87 percent of Minnesota citizens have a negative view of the pharmaceutical industry.

That is apparently why the industry's campaign to stop reimportation seems to be flagging. Rep. Michael Bilirakis, R-Tarpon Springs, who voted against Gutknecht's bill on grounds it would imperil consumer safety, has said that in his more than 20 years in Congress, rarely have constituents criticized him as harshly as they have over his opposition to reimportation.

What makes Gutknecht so persuasive on the issue is not his rhetorical skills, but his reputation as a conservative.

"Normally, I agree with almost everything Milton Friedman says; I am a conservative," he emphasizes.

Independent Rep. Bernard Sanders of Vermont, an advocate of reimportation and one of the most liberal members of Congress, welcomes Gutknecht's support as evidence that the drug reimportation issue has nothing to do with ideology.

"Gil has articulately and consistently pointed out the hypocrisy of a trade policy that allows the U.S. to import food from all over the world but won't allow Americans to buy medicines from overseas," Sanders said.

But unlike liberals, Gutknecht does not attack the pharmaceutical companies for granting huge bonuses to top executives, spending large sums of money on advertising or providing physicians with golf lessons to persuade them to prescribe a particular drug.

"I don't say, "Shame on them,"' he says. "I think they are doing what any industry would do to protect its market share. I say, "Shame on us.' ... Captive markets invite abuse. We need to do something about this kind of abuse."

Fighting counterfeiting

Until Gutknecht came along, virtually all conservative Republicans argued - as Friedman does - that patents granted to the pharmaceutical companies give them the right to charge far higher prices in the United States than in other countries.

Gutknecht argues that technology companies make the same big, upfront investment on research and development as drug companies do, but the government does not allow them to engage in discriminatory pricing.

"Intel can't sell its chips to a Japanese computer maker for X amount and to Dell in Dallas, Texas, for Y amount, and then say, "Oh, by the way, Dell, you have no access to the international market so you can get whatever price they are being sold for in other markets,"' he says.

He also rejects the drug industry and FDA's contention that allowing U.S.-made drugs to be returned to the United States from Canada would lead to rampant counterfeiting and tampering.

On his desk, Gutknecht keeps two little glass vials, one filled with tiny computer chips and another containing a white powder he calls "micro-taggets."

He says these markers now used in food can easily be incorporated into pharmaceutical products to allow authorities to determine where drugs were manufactured. He adds that the technology used to make the new $20 bill counterfeit-proof is also available to be used in drug packaging.

"If I can learn this," he says with a smile, "there are guys down at the FDA who are a whole lot smarter who can find this information too."

Gutknecht also plucks from his desk a document he says disproves the argument that other countries pay less for U.S.-made drugs only because they have imposed price controls, which are anathema to most members of Congress. It is a report published by the European Association of Euro Pharmaceutical Companies.

In the Netherlands, he says, quoting a well-marked passage in the document, the drug companies could charge higher prices, but don't because it would force higher copays on Dutch citizens covered by national health care. Higher co-pays would limit their drug sales in the Netherlands, he says.

Although the FDA has started shutting U.S. pharmacies that import drugs from Canada and other countries, Gutknecht predicts reimportation will continue. Not even a new Medicare prescription drug benefit can stop Americans from buying cheaper drugs on the world market, he says.

"There are only two options in the long term," he says. "Either we in the United States will adopt a system the same as the European countries, or we're just going to have to open up our markets. And the simplest option is to open up our markets."

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