The Relief Report ®


A newsletter covering regulatory reform efforts in Washington and across America, published by The National Center for Public Policy Research

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Issue #73 * April 29, 2000 * David A. Ridenour, Editor

 Contents:

A Canadian Horror Story: Seniors Suffer When Governments Curb Flow of Advanced Drugs to Patients


A Canadian Horror Story: Seniors Suffer When Governments Curb Flow of Advanced Drugs to Patients

 

Like Count Dracula, some really bad legislative proposals are almost impossible to kill.

House moderates last year tried hard, but failed to drive a stake through the heart of an ill-conceived bill that would impose price controls on prescription drug makers by forcing them to sell to everyone at the same discounts they offer large-volume purchasers.

As a result, you'll hear a lot more about the bill, deceptively named "The Prescription Drug Fairness for Seniors Act," when election-year rhetoric begins to heat up this year.

The bill, dubbed "Tom's of Maine," is the brainchild of Tom Allen, a first-term Democratic House member from Portland, Maine.

Allen, a Harvard-trained lawyer, may be a novice legislator but his talent for generating big-time publicity is that of a seasoned congressional veteran. Working hand-in-glove with CBS' "60 Minutes," he escorted a busload of Vermont senior citizens to Montreal last year so they could buy medication at prices less than half what they were paying in the United States. "60 Minutes" camera crews, of course, were on hand to record the indignity and the outrage of older Americans forced to travel to a "more socially enlightened neighboring nation to purchase affordable medicine."

On-camera, Allen and his band of seniors were properly indignant, urging viewers to join them in crusading for government intervention to help the U.S. catch up with Canada in subsidizing prescription drugs for have-nots.

President Clinton and other Democrats followed up on that theme, repeatedly demanding to know why Canada's drug companies can charge customers so much less than their American counterparts.

Three words, Mr. Clinton - research and development. America's pharmaceutical companies plow billions of dollars back into R & D every year.

Canada's pharmaceutical companies don't come anywhere close, even on a per capita basis. After complying with the demands of federal and provincial politicians to subsidize a decrepit health care system, Canadian health care companies have very little left over in the way of profits.

So they and most of Allen's other "advanced nations" piggyback on U.S. research & development.

Our companies lead the world in developing powerful new weapons against cancer, Alzheimer's, HIV, resurgent strains of tuberculosis, heart disease and many other dread illnesses. By and large, that research is paid for from pharmaceutical profits.

Ulcers are a good example. One seldom hears much about people with ulcers anymore.

In 1977, curing ulcers cost the pain and discomfort of a lengthy hospital stay with a typical cost of $28,000. That year a new anti-ulcer drug was discovered. By 1987, the number of ulcer operations had fallen to one-fifth of its 1977 total; most ulcer sufferers were cured with a $140 prescription.

The United States - not Japan, not Germany, not Britain, not France and certainly not Canada nor Mexico - leads the world in the development of clinically-important medicines. Drugs that save lives, prolong lives and enhance the quality of life itself.

Currently, U.S.-based pharmaceutical firms have 348 new medicines in development for diseases affecting women alone. They include 60 new drugs for breast cancer, 24 new drugs for osteoporosis and 38 new drugs for ovarian cancer.

Like 19th-century gold prospectors, today's pharmaceutical firms make a tremendous investment of talent, time and money in promising ventures that often lead nowhere.

As a result, their R & D costs amount to twenty cents on every dollar of earnings, a far higher percentage than spent by practically any other industry.

Once developed, new drugs must wend their way through the U.S. Food and Drug Administration's often Byzantine approval process - a process so rigorous that it often takes twelve to fifteen years before the gleam in the scientist's eye finds its way to the checkout counter at Walgreen's or Rite Aid. This Darwinian winnowing is so great that only one in every 5,000 discovered compounds actually becomes a product.

All of this, of course, adds extra costs to the drugs that manage to run this brutal gauntlet and emerge approved.

The government of Canada drastically reduces the cost of prescription drugs to its citizens at the point-of-sale through subsidies and price controls. Point-of-sale is the key term because Canadians pay for the low prices through exorbitantly higher taxes. Fifty percent is just the starting point.

When lawmakers start beating the drums for the Tom's of Maine bill, voters should pause and consider the quality of health care available in Allen's role model to the north.




Editorial correspondence to The Relief Report should be directed to: The National Center for Public Policy Research * 501 Capitol Court, N.E. * Washington, D.C. 20002 * (202) 543-4110 * Fax (202) 543-5975 * E-mail [email protected] * Web http://www.nationalcenter.org. Copyright 2000, The National Center for Public Policy Research. Coverage of meetings, activities or statements in the Relief Report does not imply endorsement by The National Center for Public Policy Research. Reprints of material in the Relief Report permitted provided source is credited. To receive all National Center newsletters free by e-mail, visit http://www.nationalcenter.org or send an e-mail to: mailing [email protected].


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