The Prescription Drug War Heats Up

The war on drugs has taken on a whole new meaning. The new battlefront is not over illicit drugs but over prescription medications.

Prescriptions have increasingly become the drugs of choice for millions of patients who want lower cholesterol and blood pressure, relief from migraines and depression. But in America, they're paying as much as 70 to 80 percent more than everywhere else in the world.

Estrogen replacement therapy in the U.S., for example, sells for nearly three times more than it does in Canada. Critics are quick to point out that Premarin, the most frequently prescribed estrogen replacement treatment, sells in Canada for $12 for 90 pills, but in the U.S. it goes for $35.17 for the same amount. Other top selling drugs are also priced considerably lower in Canada.

Pharmaceutical company spokesmen point to increasing research costs for drugs, but their opponents say that high pricing is purely a profit motive since much of the drug research is paid for by the U.S. government. The pharmaceutical market has grown as the population ages, increasing the demand for prescription drugs and the potential for hefty profits. IMS Health Inc., a pharmaceutical research company, put total sales for the U.S. pharmaceutical business at $125 billion in 1999.

Just across the border in Canada, most drugs cost anywhere from 12 to 86 percent less than they do in the United States. The lower prices in Canada are due to the country’s government-subsidized health system, according to Jeff Truett, a spokesman for the Pharmaceutical Research and Manufacturers Association, a trade association. Canadians benefit from the prices their government negotiates with drug manufacturers.

Dr. Bernard Branson, an epidemiologist with the U.S. Centers for Disease Control and Prevention, considers product liability to be a major factor driving up costs in the U.S. and cites problems linked to breast implants and the diet drug combination of Fen-Phen as examples. Patients can't sue the Canadian government for liability, Dr. Branson notes.

France, Germany and Finland offer even lower prescriptions prices than Canada, but because Canada is just across the border from America the disparity between the two countries is more evident. To push the issue, Vermont Congressman Bernard Sanders sponsored two bus trips across the border so patients could actually purchase prescriptions at lower prices. Last July, Sanders’ office took five women with breast cancer to Canada, where the drug Tamoxifin is priced at $34 for 180 pills, compared to the $242 they cost in the U.S. In February, Sanders' office arranged another busload of 40 senior citizens to also purchase prescriptions for less. Similar bus trips have been organized by legislators in Michigan, Maine, Minnesota and Montana. According to David Sirota, a spokesman for Sanders' office, this is perfectly legal as long as the American has a prescription from a Canadian doctor.

Meanwhile, back in the U.S., state governments have started to move to bring down the prices of prescriptions. In April, Maine became the first state to approve a bill that would put sweeping price controls on prescriptions sold in the state. The bill passed by veto-proof margins in both legislative chambers, but it could face legal challenges because of interstate commerce regulations. However, the Maine attorney general has stated that the bill is legal because states are allowed to protect the health and safety of their citizens.

The Maine legislation requires a pricing board to be put into place immediately that would set lower prices for drugs. If prices don't fall, then as of October 2001, the board would mandate that all drugs sold in Maine cost no more than they do in Canada. The time frame gives the drug companies the chance to lower the prices voluntarily; but if they don't, then the lower prices become mandatory.

"We considered it to be a public crisis," said Chellie Pingree, Senate majority leader and a sponsor of Maine's bill, referring to the price of prescriptions. She said Maine has experienced a doubling of prescription costs during the last four years.

Close behind Maine is Vermont. That state’s Senate has passed similar legislation, but the section that pertained to prescription pricing was deleted in the House version. Both chambers are now negotiating to come up with a compromise.

"Americans are paying a premium over the rest of the world," said Vermont Senator Peter Shumlin. "It's the best-kept secret in health. The pricing policies are absolutely insane." It's up to the states to do something about it, he says, because the pharmaceutical companies spend more to elect federal legislators of both parties than any other industry.

Still, at the federal level, Vermont is pushing as well. A bill sponsored by Vermont Congressman Sanders would allow the import of FDA-approved prescription drugs from Canada at lower prices. In addition to the bus trips to Canada, his office keeps a comparative list of prices of many common prescriptions that cost less across the border. The bill is mired in subcommittee, but it has received considerable negative attention from the Citizens for Better Medicare, a group that Sanders calls "a front group for millions of dollars in unregulated expenditures by the pharmaceutical industry."

Sanders criticizes the drug companies' recent advertising campaigns, created by Citizens for Better Medicare, which criticize the bus trips to Canada and argue that price reform is government interference.

"Ultimately, no matter how much they spend trying to confuse the public, they cannot deny the simple fact that Americans are paying the highest prices in the world for prescription drugs. A recent international study showed that while senior citizens in the United States were paying $1 for a drug, that same drug sold in Germany for 71 cents, Sweden for 68 cents, the United Kingdom for 65 cents, Canada for 64 cents, France for 57 cents and Italy for 51 cents," Sanders says.

Not only are there international inequities, there are domestic biases too. A White House study found that elderly people without prescription insurance typically pay 15 percent more than people with insurance. The gap has more than doubled in the last four years, according to the April 11 report. President Clinton plans to hold a conference this summer to investigate how pharmaceutical companies set their prices. His administration continues its push to cover prescriptions with Medicare, which does not currently pay for drugs.

Drug companies' standard response to price reform or controls is that it would have a negative effect on research, the cornerstone of the drug industry. In 1985, drug research cost $4 billion; now it is a $26.5 billion annual investment, according to Truett, who adds that since 1982 there have been 65 genetically engineered drugs approved for use.

Newly approved drugs have been a boon to pharmaceutical companies. Take Lipitor, for example, Parke-Davis’ top-selling cholesterol-reducing drug, which topped the $3 billion mark in 1999, ranking number two in terms of sales volume in North America, according to IMS Health Inc. In Canada, Lipitor costs $164 for 90 pills but an American patient will pay $229.03, says Sanders. There is no generic form because it is patented, a protection that lasts 20 years.

New popular medications for mental health also come much cheaper in Canada. Prozac, the number three drug sold in the U.S. by volume, cost $105.64 for 45 pills in the U.S., but the same amount will cost $43 in Canada.

Meanwhile, online prices for available drugs are even better, and no doctor's prescription is needed. Just entering in the word "prescriptions" on a search engine will bring up dozens of sites where you can buy medications. The American Medical Association has demanded that an investigation be done into the practice of doctors selling prescriptions without a face-to-face meeting with a patient, but in the meantime it's a booming Internet business.

There's also a sizzling business across the border to the South. The number one ranking prescription drug in terms of sales dollars is Prilosec, an Astra product, prescribed for excessive stomach acid, ulcers or heartburn. The generic form, omeprazole, can be bought from PharmacyMex, the first online pharmacy in Mexico, for $79 for 60 pills, compared to $240.35 for 90 Prilosec pills in the U.S.

Pharmaceutical companies are also feeling the heat in Britain, home to some AstraZeneca and Glaxo Wellcome, whose chairman has threatened to move its research bases out of the UK. As reported by Reuters on April 10, a new joint industry-government task force will look at the issue of imports of identical but much cheaper products from other European countries.

Bill Fullagar, chief executive of Novartis UK and incoming president of the Association of British Pharmaceutical Industry commented, "It is absolutely crucial that we get a positive outcome if the global pharmaceutical industry is to be reassured that Britain is to remain a world leader in attracting investment for the medicines of the future."

Clearly, the pharmacy business is likely to be the target of increased regulation in the future. Until then, if you're close to the border or have an Internet connection, a quick, cheap fix isn’t far away.

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