House OKs Diluted Drug-Price Relief

When the plan was unveiled two weeks ago, it was touted as a partial remedy for high prescription drug prices: U.S.-made medications shipped to countries with price controls would be brought back to America and sold at a discount here.

But by the time it received final House approval Wednesday, the legislation was so riddled with potential loopholes that even some of its most ardent opponents acknowledged privately they could no longer tell what, if anything, it would do.

It was a classic case, participants said, of what often happens behind closed congressional doors in an election year.

The legislation would change current law to permit pharmacists and wholesalers to import back into the United States prescription drugs originally manufactured in this country for sale abroad at lower, government-controlled prices.

However, several key provisions were left vague enough that Clinton administration officials who initially had endorsed the concept of the measure said that it would fail to achieve its stated goal of helping consumers.

Clinton Expected to Sign Legislation

“There’s no guarantee that many medications would be re-imported,” said Chris Jennings, senior health policy advisor to President Clinton, after the House approved a funding bill containing the drug importation plan on a vote of 340 to 75. The Senate is expected to pass it next week, and Clinton is expected to sign it, White House reservations notwithstanding.

“It would be a disservice to raise expectations among the public that this is going to have any effect,” Jennings said.

For the record, representatives of the pharmaceutical drug industry said that they still harbor strong objections to the legislation and will continue to oppose its adoption. Privately, however, they said that they have no idea whether the measure will work at all.

“We strongly oppose the drug re-importation provision . . . and it deeply concerns us that no public hearings were held,” said Jeffrey Trewhitt, a spokesman for PhARMA, the association that represents drug manufacturers. The group has lobbied hard and run advertisements against different versions of the legislation over the last several months.

Industry lobbyists said that some big drug companies were debating whether to file a lawsuit that would challenge the measure for interfering with patent rights.

From the beginning, the re-importation plan was an odd cause for Republicans, since most of them are on record as opposing price controls on prescription drugs. Yet the original measure, in essence, would have allowed U.S. sellers to piggyback on the price controls imposed by foreign governments.

The idea was initially championed by border-state Republicans, including Sens. James M. Jeffords (R-Vt.) and Olympia J. Snowe (R-Maine). Many of their constituents have traveled to Canadian pharmacies to buy prescription drugs at prices much lower than the same medications cost in this country.

Republicans who backed the measure conceded that it is only part of a larger effort to provide drug price relief, particularly for seniors. But they did not argue with the specific criticisms of the bill raised by Democrats.

Three key problems were cited by Democrats, who tried to eliminate the loopholes during a House-Senate conference but whose amendments were rejected on party-line votes.

First, the measure will remain in effect for only five years, making it less likely that private companies will invest significant resources in the business of re-importation. In addition, the measure allows drug makers to set higher prices on drugs slated for re-importation, essentially nullifying any price advantage that could be achieved by buying re-imported drugs.

Finally, critics said, the measure does not require drug manufacturers to allow the wholesalers that would re-import the drugs to use Food and Drug Administration-approved labeling, which lists the U.S. brand name and instructions for use of the drug. Even if the FDA accepts something other than the brand label, there would be serious copyright infringement questions and there could be difficulties identifying where and when the drug was manufactured, which could present safety problems, according to top FDA officials.

“This drug re-importation section is really a sham. It’s a partisan ploy by Republicans to pretend they are doing something,” said Rep. Henry A. Waxman (D-Los Angeles), who pushed hard for stricter language.

The drug provision is contained in a routine agriculture spending bill for 2001 that also includes a controversial provision to relax the long-standing U.S. trade embargo with Cuba. The bill would allow food and medicine sales to Cuba for the first time in nearly four decades but would impose financing restrictions that critics said would mean relatively little commerce would actually take place.

Cuban Embargo Provision Draws Fire

The Cuba embargo provision drew almost as much fire as the drug re-importation proposal. Its supporters hailed it as a landmark change in U.S. policy that could open the door to even wider trade in the future. But critics said it is more symbol than substance because of restrictions added at the insistence of anti-Fidel Castro forces.

The bill would allow food and medicine sales to Cuba, but it would continue the existing ban on imports from Cuba. It would bar U.S. banks and other institutions from extending credit or other financing for Cuba’s purchases--restrictions that analysts said would put a huge damper on purchases by cash-short Cuba. However, the compromise would allow banks in other countries to finance such transactions.

Critics of the Cuba compromise, including the Clinton administration, also objected to provisions that would write into law existing rules banning most tourist travel to Cuba. That would make it impossible for Clinton or any other president to relax the travel ban without an act of Congress.