Senate debate on health care reform came to an abrupt halt this week over a proposal from Sen. Byron Dorgan (Dem-ND) to allow the reimportation of FDA-approved drugs from Canada and other countries. Dorgan’s proposal throws a monkey-wrench into the agreement between the White House and big pharma (and Max Baucus) to limit industry contributions to health reform to $80 billion over ten years in exchange for support of a health care reform bill. Senator Obama supported and sponsored a similar bill but given the understanding with big pharma and the importance of health reform the White House is trying to convince Democrats to oppose Dorgan’s bill. Several Republicans have joined as co-sponsors but the pharma industry is arguing strenuously against the bill and Republicans who support the bill purely with the intention of defeating the larger health care bill will get a chilly response when they go looking for campaign contributions in the future. Sen. Olympia Snowe, however, is a lead co-sponsor of the bill – we needn’t review her importance to this process. The debate was put on hold over the weekend and health reform leaders are no doubt working hard to defeat the bill or find an acceptable compromise before Monday. 

Dorgan has championed this issue for many years. Senators from states with big pharma companies are unanimously opposed – big surprise. The argument usually put forward by opponents deals with safety issues and the inability to control quality product. But Dorgan insists his bill addresses all safety concerns saying “My amendment includes strong safeguards to prohibit drug counterfeiting and other practices that would put the consumer at risk.” I have to say that my concern with buying prescription drugs from a well-known Canadian drug wholesaler or pharmacist is pretty close to zero; but I don’t think I’d be buying directly from China or India no matter how large the savings. The safety issue strikes me as a pathetic political attempt to kill Dorgan’s bill. And the potential savings to American consumers are enormous – almost $100 billion over 10 years which is considerably more than the $80 billion deal negotiated with big pharma. 

So is it worth it? Is Dorgan’s proposal a good idea? 

Let’s forget the politics for a moment and talk about whether, in isolation, this makes sense. The economics of drug pricing are ridiculous. Countries with centralized health care (most of the Western world) negotiate drug prices at the government level and impose price caps that pharmaceutical companies can’t ignore. Pfizer can either sell its drugs to Canada at a price the government is willing to pay or they can forego the Canadian market. In the US there is no such strong negotiating body. When Congress passed the Medicare Plan D prescription drug benefit they specifically prohibited Medicare/Medicaid from negotiating prices with big pharma. That was a pretty handsome gift to the drug companies care of the Republican Congress. And now, as health care reform is being negotiated, there is considerable suspicion that drug prices have been jacked up ahead of the legislation. One commentary I read said that a few simple phone calls made in 2008 generated the following comparative prices for 90 tablets of Lipitor: from CVS $362 and from a reputable Canadian online pharmacy $215.46. How can this not be a good thing for US consumers? 

OK, so that’s my question – on the whole, is this good for US consumers? And by that I mean, is it the US consumer who will see the savings? Recently I read an article about the Cleveland Clinic and how it’s able to deliver the highest quality patient care in the nation while keeping costs substantially below the national average. Cleveland Clinic benefits from it’s renowned reputation in heart care and attracts patients from around the country and around the world; but CCs revenues are considerably lower than that of its competitors and that benefit rarely accrues to CC. The beneficiaries of CCs approach to medicine are the insurance companies who reimburse CC substantially less than other hospitals for the exact same procedure. So, who’s going to benefit from lower prescription drug prices if wholesalers import from Canada? Is it the consumer or is it the insurance company? That is, who pays for the great percentage of prescription drugs purchased in this country, patients or their insurers? I don’t know the answer and I’m interested in any feedback from any informed person. But if the answer is that Medicare, Medicaid, and insurance companies pay for the bulk of drug purchases then I have a hard time looking at Canadian purchases as adding great value to our health system. 

My other concern is new drug research. I’ve mentioned before my involvement with a cancer center. There are nearly 900 cancer drugs in clinical trials right now. Pfizer alone has 1000 researchers working on new cancer drugs. I hate the fact that we, the US consumer, essentially pay for that to the benefit of all the other countries around the world that pay substantially less for brand name, patent protected medications. And I hate the fact that year in and year out big pharma reports the highest profits of any industry. But if we cut too deeply into big pharma’s revenues the first thing they will do is reduce their R&D budget. Can Pfizer make do with only 500 cancer drug developers? Sure and maybe that’s what needs to happen because we will never know what drug wasn’t discovered by cutting research budgets. But is that what’s best for all of us? I’ll leave the question out there for each person to consider. Also consider that big pharma could simply raise prices to Canada (though Dorgan says his bill would prohibit that) and large US demand could reduce availability for Canadians leading Canada to take protective measures. That would limit the benefits while leaving the negative domestic political consequences intact.

Of course, tomorrow we will see this decision made without due consideration to the merits of the argument. Politics will prevail and I’d expect some compromise to surface. The most logical outcome to me would be a further concession from big pharma to increase their contribution from $80 billion (how is that supposed to happen anyway?) to $100 billion to match the expected benefits of opening importation to Canadian drugs. Deals are being made behind closed doors as they have since Harry Reid assumed control over this process. It’s extremely disturbing to see a bill of such magnitude be shrouded in mystery and the details kept from all but a handful of people. I’d like to see a health care bill pass but this process is just infuriating.

Tags: Big pharma, Byron Dorgan, Canada drug imports, Cleveland Clinic, Pfizer

This entry was posted on Sunday, December 13th, 2009 at 7:59 pm and is filed under News/Politics. You can follow any responses to this entry through the RSS 2.0 feed.