Copyright 1999 The New York Times Company
The New
York Times
November 14, 1999, Sunday, Late Edition -
Final
SECTION: Section 4; Page 1; Column 1; Week in
Review Desk
LENGTH: 1451 words
HEADLINE: THE NATION: PILL BOX;
The Gathering Storm
Over Prescription Drugs
BYLINE:
By DAVID E. ROSENBAUM
DATELINE: WASHINGTON
BODY:
THE pharmaceutical industry represents the
greatest strengths of American capitalism. And also the weaknesses.
The
drug companies are enormously profitable, highly competitive
businesses on the cusp of a scientific revolution that promises a fabulous
financial future. They supply the world with indispensable products made better
than they have ever been made before.
But neither the companies nor
their government regulators nor the politicians who pass the laws have found a
way to make sure that the vital products of this unfettered market reach all
segments of society. Businesses, insurance companies, consumers and especially
the elderly are feeling the exploding cost of drugs. And trying
to ward off government interference, the pharmaceutical industry is turning
increasingly to expensive lobbying and generous campaign contributions.
Gradually, all this is coming into focus as a potent political issue,
just as health maintenance organizations emerged from nowhere a few years ago to
become public enemy No. 1 in health care. In academic, business and political
circles, there is now general agreement that change is needed in the nation's
drug policies, though there is no consensus on what that change
should be.
"The system has to be tweaked," said Dr. Raymond Woosley,
chairman of the Department of Pharmacology at the Georgetown University Medical
Center. "But we need to address the problem carefully in a way that doesn't kill
the goose that lays the golden egg."
Others put the matter more starkly:
Prescription drugs are "a powder keg," says Dr. David A.
Kessler, dean of the Yale University School of Medicine, "because the current
system is simply not sustainable."
Drug manufacturers
are clearly feeling the political heat. For years, they have held their own
against complaints from consumer organizations about profits and prices. Now
they have more politically influential foes.
One is the elderly. AARP,
formerly the American Association of Retired Persons, has joined the Clinton
Administration in its drive to get Medicare coverage of prescription
drugs -- one of the main political debates in Washington this
fall. The organization reports that one-third of the elderly have no
prescription-drug coverage at all, and that many others have
high deductibles and caps on the amount of drug expenses they
can recover. One-quarter of Americans over 65 pay at least $500 a year out of
pocket for prescription medicine, and 12 percent pay more than $1,000.
Insurers and health maintenance organizations are another foe. They are
now paying more for prescription drugs than for
hospitalization. Michael Fedyna, chief actuary for Empire Blue Cross and Blue
Shield in New York, estimated last month that drugs will
represent 15.5 percent of premiums this year and hospital care less than 15
percent. Just three years ago, he said, drugs took 12 cents of
the premium dollar and hospitalization 22 cents.
And businesses that pay
their employees' medical insurance premiums are also beginning to speak out.
Thomas J. Donohue, president of the United States Chamber of Commerce, said
drug costs are a constant topic of discussion among his
members, though he said he knew of none who advocate price controls.
Hardly a day has gone by lately without some new reflection of the
tension between the commercial and scientific accomplishments of the
drug companies on the one hand, and the disparity in the spread
of the benefits from those accomplishments.
One day the main issue was
the battle on Wall Street over whether the American Home Products Corporation or
Pfizer Inc. would merge with a third pharmaceutical giant, the Warner-Lambert
Company, to form the largest drug company in the world.
Last week came news of the effectiveness of a blood-pressure
drug in lowering the risk of heart attacks, strokes and
diabetes, even in patients without hypertension. At the same time, USA Today ran
a long cover article on its investigation into how prescription
drugs cost much more in the United States than they do abroad.
Meanwhile, the Journal of the American Medical Association carried a
politically sensitive report describing the ways new drug
research is often exaggerated in medical journals to the benefit of the
pharmaceutical companies financing the studies.
A microcosm of the
growing political struggle over drug prices is the quiet battle
now under way in Congress over the future of the antihistamine Claritin.
Introduced by the Schering-Plough Corporation in 1993, Claritin was a
godsend to millions of allergy sufferers, providing them relief without the
debilitating side effects of other antihistamines. It has also been a gold mine
for Schering-Plough, generating $2 billion in revenue last year alone. But the
drug is expensive. It costs many patients $2.50 or more a dose.
Generic drug makers say they could produce an equivalent pill
for 50 cents.
Schering-Plough's problem is that its
patent on Claritin is due to expire in 2002. When the
patent lapses, the company will lose its most profitable
product. The company maintains that the patent life of the
drug was unfairly shortened by a quirk in a 1984
drug law, and it argues it deserves a three-year
extension. Such an extension would cost
consumers $7 billion, according to a study at the University of Minnesota.
Schering-Plough has pulled out all stops to get its way in Congress. The
company has increased its lobbying expenditures to $4.3 million last year from
$1.9 million in 1996 and has retained such high-powered lobbyists as Howard H.
Baker Jr., the former Senate Republican leader, and Peter Knight, a close friend
and fund-raiser for Vice President Al Gore. It also donated nearly $500,000 to
political candidates and parties in the 1998 elections and is giving at an even
faster pace this year.
The patent extension would never
be approved on a straight up-or-down vote. But the company's supporters in the
Senate -- including Trent Lott of Mississippi, the majority leader; Orrin G.
Hatch, Republican of Utah, chairman of the Judiciary Committee; and Robert G.
Torricelli of New Jersey, chairman of the Democratic Senatorial Campaign
Committee -- have been trying to sneak the measure into a must-pass spending
bill in the last days of the Congressional session.
SO far, opponents of
the measure have been able to block it. A leader of the opposition, Senator
Patrick J. Leahy, Democrat of Vermont, calls it "a grab of audacious
proportions." But the outcome is very much in doubt.
Last year,
Schering-Plough reported a profit of $1.8 billion, a 22 percent increase over
1997, in an industry that, according to Fortune Magazine, was the most
profitable of all the nation's industries based on equity, revenue and assets.
The price of pharmaceutical stocks, though up only slightly this year, rose 34
percent in 1997 and 40 percent in 1998.
In Senate testimony last summer,
Richard Jay Kogan, Schering-Plough's chairman and chief executive, made the case
that drug companies have been making for years: the companies
must make a handsome profit on their blockbuster drugs because
so much of their research goes for naught.
"Only 1 in every 5,000
chemical compounds ever reaches the U.S. market," Mr. Kogan said. "Bringing a
drug to the marketplace takes 12 to 15 years and costs up to
$500 million."
Other drug company officials insist that
any effort to control drug prices, as is done in every other
developed country, would have the disastrous consequence here of stifling
invaluable research. Some Americans may go to Canada to buy prescription
drugs, said Mark Grayson, a spokesman for the Pharmaceutical
Research and Manufacturers Association, but many more Canadians come to the
United States for medical treatment. "You have to look at the whole system," he
said, "not pick and choose among the parts."
MEANTIME, the industry is
at the dawn of a new scientific era that should expand the potential for
profits. Advances in biotechnology and genomics, the science of identifying
genes and how they work, promise a wealth of exciting new miracle
drugs in the next decade.
"The new science is going to
drive the process such that pharmaceuticals are going to command a larger and
larger share of the health care pie," said Viren Mehta, head of an investment
advisory firm that specializes in the pharmaceutical industry.
But the
scientific achievements may worsen the industry's political problems. "We will
want those drugs," said Dr. Kessler, who was head of the Food
and Drug Administration before becoming dean at Yale. "They
will increasingly treat disease. But they will also increase the disparity we
now have between the haves and the have-nots."
http://www.nytimes.com
GRAPHIC: Photo: Mass
producing pills. The pharmaceutical industry may be emerging as the next front
in the politics of health care. (Photofest)
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November 14, 1999 
