Have pharmaceutical companies been unfair to American consumers? Yes: Americans should not have to pay significantly more for the same prescription drugs as our friends in Canada and Europe - SYMPOSIUM
There is little question that increasing health-care costs are a problem that affects all Americans. Small businesses have difficulty hiring new employees because they can't afford to provide health insurance. Seniors are forced to cut prescriptions in half or skip meals. Moms and dads struggle to meet the basic health-care needs of their children. Prescription-drug prices continue to increase at four to five times the rate of inflation.
The Bush administration and congressional leadership, in an attempt to address some of these concerns, proposed a prescription-drug benefit under Medicare. Several weeks ago the House passed HR 1, the Prescription Drug and Medicare Modernization Act of 2003, by a razor-thin 216-215 vote. Unfortunately, this legislation does little to address the driver of increasing health-care costs: exorbitant prescription-drug prices.
I hope I'm wrong, but I am afraid the proposed benefit may only make a bad situation worse. With 40 million baby boomers set to retire in the next 20 years, a benefit that fails to address the price side will result in staggering deficits, dramatic tax increases or both. If tax cuts are supposed to stimulate the economy today, what will be the effect of massive tax increases in coming years?
Fortunately, Congress has passed HR 2427, the Pharmaceutical Market Access Act, allowing market access to Food and Drug Administration (FDA) approved pharmaceuticals from FDA-approved facilities in 25 industrialized countries. This legislation had broad support in the House and had the support of real seniors groups across the country. I say "real" seniors groups to distinguish between groups composed of and funded by seniors and those created by the pharmaceutical industry.
One example of the latter is the Seniors Coalition of Springfield, Va. This organization sent thousands of mailings across the United States but, sadly, the Seniors Coalition is funded by the pharmaceutical industry to protect the industry's interests.
No one disputes that Americans pay as much as 10 times more for the same prescription drugs as our counterparts around the world. I have no problem helping our friends in sub-Saharan Africa, but I do have a problem with American consumers subsidizing the starving Swiss.
Patricia Reinartz of Austin, Minn., is a classic example. She is a senior who takes Protenix and Premarin. Reinartz was spending $360 per month to fill her prescriptions. She now imports these same FDA-approved drugs at a cost of $210 per month. Although $150 per month might not seem like much to a pharmaceutical executive, to seniors living on fixed incomes it can be the difference between despair and dignity. In Reinartz's own words, "Please keep working for prescription-drug importation. I order from abroad; it works great!''
Reinartz has decided to risk FDA prosecution in order to sustain her health. She shouldn't be branded a common criminal because Congress stands between her and the opportunity to purchase pharmaceuticals at world-market prices. If Reinartz can buy imported meat and vegetables from the local grocery store, shouldn't she be able to purchase her medication in a free market as well?
Kate Stahl is an 84-year-old grandmother who volunteers for the Minnesota Senior Federation. Stahl joined me on Capitol Hill when I introduced HR 2427. In the June 9 U.S. News and World Report she said, "I'd like nothing better than to be thrown in jail [for importing prescription drugs]." It's outrageous that she would even have to consider such drastic measures, but she is standing on the shoulders of patriots as she stands up for American seniors.
For every other consumable good, Congress, the FDA and the U.S. Department of Agriculture (USDA) have created standards and regulations to promote safety in importation. Food products are imported in massive quantities. Through cooperative governmental efforts, we drink imported fruit juice and eat imported meats with confidence. We can accomplish the same for prescription drugs.
The FDA's concerns for safety apparently do not extend to seniors who cannot afford their prescribed drugs. Americans such as Reinartz and Stahl are crossing the border for cheaper drugs in order to sustain their health. But the FDA does not look at this issue as if they are sustaining their health. The FDA sees only that they are improperly importing pharmaceuticals. This is outrageous! As my good friend and pharmaceutical-market-access expert Steve Schondelmeyer of the University of Minnesota PRIME Institute says, "A drug you cannot afford is neither safe nor effective."
So true. On a recent trip to Germany, I purchased 10 of the most commonly prescribed drugs from the airport pharmacy in Munich for a total cost of $373.30. Those same drugs cost a whopping $1,039.65 in the United States.
These price disparities are not isolated to a few drugs. My 86-year-old father takes Coumadin, a commonly prescribed blood thinner. A 30-day supply of Coumadin costs $89.95 in the United States, but only $21 in Germany. Tamoxifen, a miracle breast-cancer drug that was developed almost entirely with American taxpayer dollars, costs $360 in the United States, but only $60 in Germany. This, unfortunately, is the rule rather than the exception.
For its part, GlaxoSmithKline, under the auspices of renewed "safety concerns," is threatening to stop shipping its products to Canadian wholesalers and pharmacies that sell to American patients as of January 2003. Despite clinging to claims of the dangers of counterfeit and misbranded drugs, Glaxo has been unable to cite a single incident of damage caused by imported FDA-approved prescription drugs.
Pharmaceutical companies are urging U.S. consumers to ignore the man behind the curtain. Facts are stubborn things. And the fact is that Americans pay significantly more for the same prescription drugs as our friends in Canada and Europe. At the same time, U.S. taxpayers are subsidizing the rest of the world by paying a lion's share of development costs.
The safety issue is a red herring. The real issue is the prices Americans pay and the effect they will have on any prescription-drug benefit.
According to the Congressional Budget Office, seniors alone will spend $1.8 trillion on prescription drugs during the next 10 years. Proponents of the prescription-drug benefit claim the cost will not exceed the $400 billion set aside. Does anyone believe we will solve a $1.8 trillion problem with a $400 billion solution?
The history of federal entitlements teaches that costs will escalate. For that matter, considering that it is an entitlement and has no fixed budget, does anyone believe it will cost less than $1.8 trillion? In fact, according to Texas A&M University's Social Security and Medicare Trustees/Private Enterprise Research Center, the new drug benefit will cost a whopping $7.5 trillion.
What's worse, included in the entitlement are the wealthy. In a time when we are facing record deficits, is it wise to provide a prescription-drug benefit for Ross Perot? As my friend Rep. John Shadegg (R-Ariz.) says, "To provide a generous universal subsidy to retirees regardless of how wealthy is bad public policy."
We simply cannot afford to pass a prescription-drug benefit without considering costs. Without competitive pressure, the giant pharmaceutical companies well may shift savings from any discounts given to Medicare onto the backs of businesses, the underinsured and the uninsured. One way to keep costs in check is to open markets.
Because the House prescription-drug benefit failed to address the outrageously high prices of prescription drugs, I voted against it. This is a matter of generational fairness for our kids and grandkids. And it's a matter of giving seniors real reform that provides affordable prescription drugs for all Americans.
Congress should refocus the FDA on its fundamental mission of protecting public health, as well as open the United States to modern, industrialized markets for FDA-approved prescription drugs from FDA-approved facilities. Americans depend on competitive prices provided by free markets. Congress should act immediately to open up those markets fully and completely.
Modern bar-coded technology, together with counterfeit-proof packaging, can ensure safety and quality. Open markets will ensure affordability. Americans deserve world-class prescription drugs at world-market prices.
Gutknecht has represented Minnesota's 1st District since 1994. He is chairman of the House Agriculture subcommittee on Department Operations, Oversight, Nutrition and Forestry, vice chairman of the House Science Committee and a member of the House Budget Committee.