Sacrificing the Grandkids for Grandma

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"I cannot explain to my mother any longer why she should pay twice or two-thirds more than what is paid in Canada and Mexico. I'm switching my position."
United States Senator Trent Lott (R-Miss.), March 11th, 2004.

Dear Sen. Lott:

It pains me to hear that your concern for your aged mom has caused some confusion on your part about the risks and benefits of importing drugs from Canada and elsewhere. You suggest that your inability to explain your earlier position to your aged mother is justification for your change in position

Let me share with you some ideas that may help you explain this to your mother, whom I trust is truly benefiting from products developed as a result of our free-market-based pharmaceutical industry.

You have previously been known as an ardent supporter of free-market enterprise. Now it seems as though you have joined the list of populist officials seeking to justify the importation of drugs from Canada, where even American-made pharmaceuticals are subject to price controls.

By way of explaining your flip-flop on this issue, you have used your aged mom as an excuse to take aim at the new, favorite punching bag of politicians seeking to curry favor with the electorate: the pharmaceutical industry. You allege that you are confused over how to explain to mom that she has to pay more than Canadians and Mexicans for her drug therapy. Allow me to help you explain the situation to her:

From a purely short-term, fiscal point of view, importing cheaper drugs might seem to make sense and, it goes without saying, such a policy would reap political dividends in an election year. This has been emphasized by the apparent caving in of Senate majority leader Frist, who has agreed to put the subject up for Senate discussion in order to free outgoing FDA Commissioner McClellan's nomination as Medicare czar from being held hostage by importation advocates. Dr. McClellan, while heading the FDA, had been firm in his opposition to drug importation, based upon the issue of the possible lack of safety of imported foreign drugs, which have been shown to often be of uncertain origin.

But in the long run re-importation will squelch drug innovation and have devastating consequences for the future availability of life-saving pharmaceuticals. The high price of many drugs is a serious problem especially for the elderly and others on fixed incomes. But it's beneath you, as a Senator, to beat up on the pharmaceutical companies for the price of prescriptions. Why do I say this?

First of all, Canada and many of the other countries under discussion have socialized medicine, and government-imposed price controls on drug prices. But since developing, testing, making, and marketing drugs doesn't become any cheaper just because these governments keep prices artificially low, the U.S. pharmaceutical industry has forced the U.S. drug purchaser to subsidize foreign markets, so that the drug companies can continue to do business beyond our borders. In plain American, the U.S. consumer pays more so that Canadians and Swedes pay less.

Second, our pharmaceutical industry sinks billions of dollars annually into developing innovative, beneficial drugs, which extend and enhance our lives (and the lives of Canadians, as well as millions of others around the world) in many ways. Those billions are required for research, which involves exceedingly high costs, because the FDA is the most demanding regulatory body on earth. Consequently, American-made drugs are the safest on earth.

Compare the American pharmaceutical output with all the important new drugs produced by the Canadian, Swedish, and Japanese pharmaceutical industries in the past few decades. If you're having trouble remembering the names of these drugs, you are forgiven: The U.S. pharmaceutical industry produces well over half of the world's innovative drug output. Those of us of a certain age may remember the olden days, when even Canada had a vibrant pharmaceutical research and development industry -- before government price controls forced them to close their facilities, or to move here.

Senator Lott, if your new position represents the sentiment of our public sector decision-makers to import foreign drugs to save a few bucks, the cash flow behind the discovery and development of innovative drugs will dramatically slow. Already, stories have appeared noting the sorry state of the pharmaceutical industry's new drug pipelines and the effect they have had on bottom lines. Jobs are now being lost among drug companies which had not experienced job insecurity in recent memory.

If this trend continues, the 2014 pharmacopoeia will resemble the 2004 drug list, as our waves of pharmaceutical innovation dry up. If Congress had enacted similar proposals decades ago, many of us wouldn't be around today. Our children, and their children, should be allowed to reap the benefits of the amazing improvement in public health we baby-boomers have experienced, which will continue so long as there are sufficient financial resources. We should not let a shortsighted view of drug pricing force us into competition with our children, and grandchildren, in the arena of public-health policy. We should not be mortgaging the future health of our society for transient, politically-motivated benefits.

One way to reduce drug costs: the onerous FDA drug-approval process must be streamlined. The multi-million dollar, multi-year investment required to produce innovative drugs should be slashed, benefiting everyone. But undercutting the American pharmaceutical industry with cheap imports will only kill our golden goose.

Senator Lott, with all due respect, you can perhaps now explain this to your mother but you should be more troubled with how you will explain your new position to your grandchildren.

Dr. Gilbert Ross is medical and executive director of the American Council on Science and Health.

RESPONSES:

May 21, 2004

I read Dr. Gilbert Ross's article, "Sacrificing the Grandkids for Grandma," and while I found it very interesting, I believe that much has been left out that slants the article in favor of the pharmaceutical companies. One item that drives up drug prices (and probably the cost of health care in general) in the United States is the enormous amount of money the pharmaceutical companies spend on advertising to consumers. Additional sums are spent on buying "advertising specialties" (trinkets such as note pads, pens, mugs, and the like) that are given to doctors to remind/influence them to prescribe a specific brand. The pharmaceutical industry also spends an enormous amount for lobbyists in Washington. All this drives up prices with no medical benefit to the consumer.

While it is true that importing drugs from Canada is only a short-term solution, I don't believe that it will lead to less R&D in this country. It is more likely to lead to supply rationing and higher prices in Canada (some of this is already ocurring). Allowing the pharmaceutical companies (and lobbyists and trade organizations) to perpetuate the myth that reimporting drugs from Canada should be banned because it is somehow unsafe is deceitful. In the short term, reimporting drugs is good for American consumers (lower costs) and good for Canada (higher volume sales = higher profits). Politicians who support it can use it to gain votes at the potential expense of political contributions from the pharmaceutical industry. In the long term, however, allowing Americans to import drugs from Canada will probably do more harm to Canadians (in the form of supply rationing and price increases) than to us. Also in the long term, the economic and political pressure from this issue might force the pharmaceutical companies to reevaluate their pricing practices such that the costs of reimportation would exceed the potential savings from doing so.

Frank S.

Dear Frank S.:

Thank you for your comments. I of course disagree, not with the factual content of your statements, but with their seeming agenda.

Why should not the pharmaceutical industry be entitled to advertise their products, whether via TV ads or with gifts to physicians, the same as any other industry/product manufacturer can? You do not complain (I assume) when GM advertises in whatever media it chooses to in order to maximize its sales and profits. If producers of dental implants attended a meeting and distributed various goodies to dentists with the aim of increasing their name recognition, would this be a disservice to public health?

If the pharmaceutical companies increase their bottom lines through DTC ads, and these were to be restricted, their bottom line would suffer, and so would their funding available for new drug innovation. Same result as price controls (and drug importation), different method. Same comment pertains to lobbying: why should the pharmaceutical companies be prevented from pleading their case before regulators?

Drug importation will indeed lead to shortages in Canada -- as it already has, from what I read. And I wonder what "higher profits" you refer to up there? Perhaps for a few mass-market pharmacies that are able to take advantage of the current US-Canadian market distortions brought on by the de facto price controls inherent in importation.

The likelihood of significant safety issues, due to both sub-standard and counterfeit drugs being among those imported, is far from a "myth," as we will unfortunately discover if the current bill passes, allowing importation from Canada and the entire EU shortly. The problem of phony drugs is endemic outside the U.S. -- another problem we will soon be importing, I fear.

Best,

Gilbert Ross, M.D.
Medical and Executive Director
American Council on Science and Health