Drug Heist
In its latest nibble around the edges of domestic policy problems, the Clinton administration Tuesday proposed spending $10 million next year to hire a team of federal investigators to assure that Internet sites obtain federal approval before they sell prescription drugs. The investigators could levy half-million-dollar fines on violators and generally beef up oversight of a growing and virtually unregulated market in which Web sites based in the United States and abroad illegally dispense drugs.
President Clinton’s proposal, however, inadvertently highlights another, related problem that it does nothing to solve--the outrageously high prescription drug prices that have led many U.S. consumers to seek discounts over the Internet in the first place.
U.S. companies generally charge foreign wholesale customers a pittance of what they ask Americans to pay for drugs. In addition, they have been raising prices about 12% a year since 1993, far above the 5.1% yearly rise in the overall health care industry, and paying significantly less in taxes than other U.S. industries, says a new study by the nonpartisan Congressional Research Service. All this inflated pricing comes despite the companies’ record profits. Their after-tax profits as a percentage of sales averaged 17% from 1994 to 1998, compared with 5% for all other industries.
Clinton’s new Internet oversight regime will do nothing to force drug prices down, but he did propose a way to do that earlier this year. That plan would have created a Medicare benefit for prescription drugs, turning the federal government into a powerful buyer that could have won big group discounts for consumers. But the proposal was defeated after intense lobbying by the politically powerful prescription drug industry. The industry campaign featured highly misleading ads in which an elderly person told TV viewers that the president wanted to “put big government in our medicine cabinets.”
Democratic presidential candidates Al Gore and Bill Bradley are now trying to revive support for the idea. The leading GOP candidates, George W. Bush and John McCain, have yet to support a viable plan to reduce drug costs.
A key test of how serious next year’s presidential and congressional candidates are about ending prescription drug price gouging will be whether they lend their support to the Medicare idea, as well as other promising ideas to put market pressure on the prescription drug industry. These include legislation proposed last October by Sen. Paul Wellstone (D-Minn.) and others that would allow American pharmacists and distributors to import FDA-approved prescription drugs into the United States and sell them at lower prices.
The U.S. prescription drug industry is unquestionably the world’s most innovative, but there’s no reason U.S. consumers should have to pay the highest prices for that ingenuity.
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Paying More
Average prices for a month’s supply of drugs most commonly used by seniors.
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U.S. Canada Mexico Zocor (cholesterol) $106.68 $46.17 $67.65 Norvasc (hypertension) $118.18 $89.91 $99.32 Prilosec (ulcers) $116.32 $55.10 $32.10 Procardia (angina) $132.48 $74.25 $76.60 Zoloft (depression) $222.19 $129.05 $219.35
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Source: Democratic staff of House Government Reform and Oversight Committee
