PREMIUM SEARCH Search by job title, geography and build a list of executive contacts
Even Big Pharma's legendary political clout has proven no match for the anger of ordinary folk over escalating costs at the drugstore. The industry thought its heated lobbying, hefty campaign contributions, and White House backing could quash Capitol Hill's drive to allow Americans to import drugs from countries with far lower prices. But in an early morning vote on July 25, the House handed the industry a stunning rebuke -- a 243-to-186 vote on a bill that opens the door to widespread imports. "The will of the Congress spoke," says Representative Jo Ann Emerson (R-Mo.), who led the fight. "The American people want relief."
The vote shines a harsh light on the prices Americans pay for medicines -- often more than twice what Canadians or Europeans face. "American consumers are footing the bill for R&D while consumers in other countries get the benefit," says Senator Susan M. Collins (R-Me.), a key Senate supporter of drug imports. "I don't think that's fair."
SAVINGS AND PROFITS. The price disparity has already spawned scores of storefronts across the country and hundreds of Web sites offering U.S. residents cheaper drugs from Canada and elsewhere (see BW Online, 7/30/03, "An Odd Quiet over Rx Imports"). And if Congress gives the green light to imports, the impact on Big Pharma's prices -- and profits -- could be huge. Even if imports were limited to products from Canada, Senator Byron L. Dorgan (D-N.D.) pegs the savings for consumers at up to $38 billion a year, most of which will come out of drugmakers' pockets.
Mounting pressure to lower drug prices through imports comes at a time when the industry is already suffering from a paucity of new drugs coming out of the pipeline and from top-selling medicines going off patent, ushering in competition from cheaper generics. Profits are also under threat as poor countries such as Mexico increasingly push for the right to manufacture and sell far cheaper drugs.
In this environment, allowing drug imports "would have a devastating impact on the pharmaceutical industry's profits," says independent analyst Hemant K. Shah.
"HUGE MOMENTUM." No one expects the House bill, which would open the U.S. to imports from 25 specified countries, to become law as written. But the vote virtually guarantees that any bill Congress manages to pass this year adding a drug benefit to Medicare will include a plan to let Americans buy cheaper drugs from beyond U.S. borders. That's because the Senate-passed version of the Medicare bill already has a provision that permits imports from Canada -- as long as the federal government can ensure the drugs' safety. "The House vote has generated huge momentum," says Representative Bernard Sanders (I-Vt).
Still, a federal guarantee that imported drugs are safe remains a big "if." Congress passed a similar law allowing imports in 2000, provided the Health & Human Services Dept. could guarantee their safety. But HHS refused to sign off. HHS officials say they won't allow imports this time, either, because, they argue, such drugs would be too risky for consumers. Food & Drug Administration policy chief William K. Hubbard points to drugs ordered from Canada that weren't refrigerated as required or which were actually made in India. "The consumer is totally at the mercy of the person on the other end," he says.
If the HHS and FDA refuse to certify that drugs can be imported safely, according to the current Senate measure, the plan would go nowhere. That's why some political hands argue that members who passed the House bill got a free vote: They can tell constituents they took a stand for cheaper drugs even though nothing will change.
"This is an illusory promise," says Ira S. Loss, senior health-care analyst for Washington Analysis LLC. But "there is such hunger for solutions to these problems with pharmaceuticals that people latch onto things that are illusory."
Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.
Printer-Friendly Version
