Copyright 2000 Plain Dealer Publishing Co.
The
Plain Dealer
October 30, 2000 Monday, FINAL / ALL
SECTION: ARTS & LIFE; Pg. 4E
LENGTH: 769 words
HEADLINE:
DRUG INDUSTRY FIGHTS MAINE PRICE CONTROLS
BYLINE: By ED SILVERMAN; NEWHOUSE NEWS SERVICE
BODY:
The pharmaceutical industry's war against the
state of Maine is intensifying.
In the wake of Maine's groundbreaking
price-control legislation, two more companies, Bristol-Myers Squibb Co. and
AstraZeneca Plc, have shifted their distribution business out of state in the
past month. Until now, SmithKline Beecham Plc had been the only
drug maker known to have made such a move.
The action
underscores what is going to be a fierce and closely watched battle. In
mid-August Maine became the first state to require drug makers
to negotiate lower prices or face price controls in 2003. The law allows the
state to purchase medicines on behalf of 325,000 residents who lack insurance
coverage for prescription drugs.
Drug makers, which
have endured intense criticism over their pricing policies this election year,
argue that price controls would limit revenue and cap the profits that can be
plowed back into research and development. The industry raises the same point in
the national debate over competing proposals to provide a
prescription-drug benefit to Medicare recipients.
"We
look at the law as having a detrimental impact," said Pat Donohue, a
Bristol-Myers spokesman. "It discourages investment in new medicines."
Rachel Bloom, an AstraZeneca spokeswoman, called the shift "a business
decision."
Although Maine is mostly rural and sparsely populated, the
legislation may have national ramifications. The drug industry
fears other states will follow Maine's lead, particularly in New England where
residents have access to cheaper drugs in Canada. Many senior
citizens have fueled the controversy by taking bus trips to Montreal and other
points to buy medicine.
Widening
Similar bills have been
introduced in a number of states and others are conducting hearings and studies,
said Marjorie Powell, assistant general counsel at the Pharmaceutical Research
and Manufacturers of America, an industry trade group that sued Maine last
month, saying the legislation is unconstitutional.
"Price controls
aren't the answer," she said. "We think they don't work and will ultimately hurt
patients."
Critics of the industry, however, charge that profits are too
high; that the cost of researching and developing new drugs is
overstated; and that a large amount of resources is actually spent on
advertising, influencing doctors' prescribing trends or lobbying the federal
government for patent extensions and other favorable
legislation.
The issue is being debated across the nation and figures
prominently in the presidential campaign. But in the absence of federal
legislation, it's playing out, for now, in Maine, where roughly one in four
people lack some type of insurance for prescription drugs.
Many Maine legislators argue that the pharmaceutical industry has
employed scare tactics in the hopes of first defeating the legislation and now
turning popular support against the politicians who forged it. Chellie Pingree,
the Maine legislator who spearheaded the law and has been touring the country
touting its provisions, accused the drug makers of scaring
senior citizens into thinking their drugs won't be available.
"We wrote this law anticipating some reluctance from the pharmaceutical
manufacturers. So I'm not surprised," she said. "But I'm not pleased. It's
really just a threat. And it's actually kind of silly, because I don't think it
will stop lawmakers from proceeding with what we know is a good idea."
One reason the drug makers are shifting their
distribution out of state is to avoid a provision in Maine's new law. This
requires drug makers selling medicines in the state through any
public assistance program, such as Medicaid, to offer rebates to the purchasing
program created by the Maine law. By shifting their distribution to facilities
outside Maine, the drug makers are hoping to avoid this
provision.
The drug makers, however, insist their
products will remain available in Maine, because they say medicines will now
simply be trucked from warehouses in nearby states. In each case, the warehouses
are owned by the same distributor, Bindley Western Industries Inc. The manager
of Bindley's Maine facility didn't return telephone calls seeking comment, but a
company official and spokesmen for the drug makers confirmed
the arrangement.
The drug makers deny that the
distribution shift will result in higher prices. But one Maine legislator, Joe
Bruno, who also owns 10 pharmacies in the state, said any additional shipping
costs would likely be borne by retailers. In some instances, he said, this could
result in higher prices.
LOAD-DATE: October 31, 2000
