Board Similar to Canada’s Urged to Curb Drug Prices

The chairman of the House Ways and Means health subcommittee called Wednesday for the creation of a Canadian-style government board to regulate prescription drug prices, estimating that it could save $60 billion over the next decade.

Rep. Pete Stark (D-Oakland), who will be a key player in upcoming efforts to overhaul the national health care system, is one of a growing number of lawmakers arguing for more regulation of pharmaceutical industry prices.

Drug costs have come under increasing scrutiny, because they are one of the fastest rising components of health care spending; pharmaceutical company profit rates are triple the Fortune 500 average.

Stark released a study by Stephen W. Schondelmeyer, a University of Minnesota pharmacy professor, indicating that, without government intervention, Americans could be spending as much as $86 billion a year on prescription drugs in the year 2003--more than double today’s spending.

Last week, a report by the same professor was cited by senators from both parties as evidence that pharmaceutical companies have broken their public promises to restrain price increases.

“Like a spoiled child, the pharmaceutical industry has wept and stamped its feet whenever cost-containment measures have been proposed,” Stark said in a statement released with the report.

A spokesman for the Pharmaceutical Manufacturers Assn. said that the group needed time to study Schondelmeyer’s research and Stark’s proposal before it could comment.

Stark is proposing that President Clinton appoint a board to investigate cases in which drug prices rise more than 2 percentage points faster than the rate of inflation.

If those increases are not justified by higher costs, the board would have the power to shorten the patent lives of the drugs and revoke the tax incentives that helped finance their development.

In Canada, where a similar system is in place, consumers pay 32% less than Americans for drugs, Stark said.