It's time to guarantee equal drug prices for all

By SARA FRITZ

© St. Petersburg Times, published May 1, 2000

WASHINGTON -- Amid the growing public furor over high prescription drug prices, it probably was inevitable that American drug manufacturers would be confronted with the two words they fear most: price controls.

Yes, there are moves afoot in Washington and in a number of state capitals to clamp government controls on the ever-increasing prices of all those lifesaving, miracle drugs that Americans have come to depend upon. You will hear a lot more about this in the weeks ahead as the drug industry gears up a massive public relations drive against price controls.

If you ask Alan F. Holmer, president of the Pharmaceutical Research and Manufacturers Association, the industry's lobbying arm, how he feels about price controls, his reply sounds like a line from Dr. Seuss' book for children, Green Eggs and Ham.

"We oppose price controls in any form -- not direct price controls, not indirect price controls, not by design, not by accident, not by stealth, not by baby steps," Holmer says.

Just in the past week, much to Holmer's dismay, the idea of price controls on pharmaceuticals seem to have become every bit as popular as the industry's best-selling anti-impotence medicine, Viagra.

Sen. Slade Gorton, R-Wash., introduced price-control legislation in Congress. The Maine legislature passed a bill that would limit drug prices in that state beginning October 2001. And two Democrats in Congress, Sen. Paul Wellstone of Minnesota and Rep. Pete Stark of California have authored legislation to abolish research and development tax credits for drug companies that charge higher prices in the United States than they do in other countries.

In addition, the New York Times energized the price controls movement with a front page story explaining how the new anti-glaucoma drug, Xalatan, which was developed with $4-million in taxpayer funds, is now too high-priced for some of the taxpayers who need it.

Most Americans can be depended upon to oppose price controls. Not only are they known to have serious economic drawbacks, but Americans also recognize that most price-control schemes require a government bureaucracy to impose them.

But drug manufacturing companies should not expect the nation's inherent bias against price controls to carry the day. High prescription prices have become so controversial that even opponents of price controls could begin to look favorably on these proposals.

The most compelling argument for government action is the oft-told story of senior citizens who drive over the border into Canada or Mexico for drugs at prices far below what they must pay in the United States.

According to Gorton, Prozac, the anti-depressant, costs $2.21 per capsule in the United States and only 95 cents each in Mexico. Claritin, the allergy medication, is $2 in this country and 41 cents in the United Kingdom. Rilutek, which is used to treat Lou Gehrig's disease, is $9,000 here and $5,000 in France.

Pharmaceutical industry executives counter that price differences between the United States and other countries are often exaggerated. Still, they cannot deny that it is possible for Americans to obtain many popular products in other countries for less.

As an alternative to price controls, the drug manufacturers are encouraging Congress to move quickly on legislation to provide drug benefits for Medicare recipients. The industry embraced this solution reluctantly, however. Historically, drug manufacturers have opposed prescription drug coverage for Medicare recipients on grounds that it would amount to indirect price controls. By opposing it for so long, they have contributed to the urgency of their current predicament.

Prescription drugs cost more in the United States because this is one of the few countries that do not have price controls. The pharmaceutical companies say they must charge more in the United States because this is the only country that allows them to pass their research and development costs along to the consumer. It is proper that U.S. consumers should pay these costs, they say, because the United States is the world leader in modern medicine.

By proposing legislation that would require companies to charge the same price to all customers, foreign and domestic, Gorton insists he is not trying to deprive the drug companies of their right to recoup their research and development costs. Instead, he says he is trying to give the manufacturers the backbone to demand higher prices in other countries so that people everywhere pay the same.

"I am convinced," says Gorton, "if we give them (drug manufacturers) the legal basis to say (to other countries), "Sorry, . . . we were willing to do it, but American law prevents us from doing it.' The other countries are therefore faced with the proposition of either paying a fair price or not having the drug available. And I can't imagine that patients in places like Western Europe and in Canada are going to sit still for that very long." This legislation is not being offered as an alternative to a Medicare prescription drug benefit, as the drug industry would have you believe. There is a need to eliminate price disparities no matter who is paying.

The best way for pharmaceutical industry executives to beat back the growing sentiment in favor of price controls is for them to do voluntarily what Gorton is trying to force them to do with his legislation: to demand what they believe is a fair price in all countries. American drug consumers should not be forced to pay a premium for the industry's unwillingness to take such a simple step.

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