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Read Making a Killing

home / healthcare / in the media

San Diego Union Tribune
May 25, 2004

by Penni Crabtree, UNION-TRIBUNE STAFF WRITER

Votes likely on bills aimed at Rx costs

State legislation that pits California's booming life sciences industry against consumer and senior groups fed up with the high cost of prescription drugs could reach a key vote as early as today.

Four bills that aim to lower prescription drug costs, including one that would open the door in a limited way to drug imports from Canada, are expected to reach votes on the Assembly floor this week.

Most of the measures are bitterly opposed by pharmaceutical and biotechnology companies, which argue that cheaper drug imports will cut into U.S. profits. Those profits fund most of the research into finding new cures, and provide incentives for venture capitalists to fund the kind of biotech startups that created blockbuster drugs like Rituxan, a cancer treatment developed in San Diego by Biogen Idec.

The industry, backed by the Food and Drug Administration, also maintains that imports could pose potential safety issues for consumers.

Consumer advocates counter that the drug industry is interested only in protecting its financial bottom line at the expense of American consumers who pay 40 to 75 percent more for some drugs than they would in Canada.

Drug importation has become a lightening rod for U.S. consumer discontent. Canada and most other industrialized countries enjoy substantially lower prices because their governments negotiate set prices with drug companies. In contrast, the U.S. government does not impose price controls.

The bills that will be considered this week are a response in part to concerns about the new Medicare law enacted last year, which includes a prescription drug benefit for seniors. Some state lawmakers said the federal law did little to address the problem of costly medicines.

"We always hoped the federal government would act on this," said Assemblyman Dario Frommer, D-Los Angeles, who authored a bill that would create a state Web site where Californians could shop for licensed Canadian pharmacies. "Now there is a Boston Tea Party kind of rebellion, with an estimated 1 billion Americans already buying medicines from Canada.

"Americans are paying more for drugs than any country in the world and they are subsidizing one-third of the research -- which is appropriate, but we ought to get a break on the prices," Frommer said.

Back door controls?

Drug industry advocates say that allowing Canadian imports is just a way of bringing price controls to the United States through the back door, and will have dire consequences.

"Who else is going to pay for innovation? We spend more in R&D dollars for cancer than any place in the world -- do we just walk away from that?" said Stephen Chang, chief executive of San Diego's privately held Astral Therapeutics. "This is about the availability of new drugs and the long-term consequences that importation will introduce."

The votes on the bills, which each will require a majority of 41 votes, will be close, many agree. Frommer said the drug industry has "pulled out all the stops" to defeat them.

Lobbying groups with financial ties to the drug industry have formed, including Cures, an entity headed by San Diego's Chang. Cures, which stands for Californians United for Research, Economic Development and Saving Lives, was started with seed funding from Biocom, a San Diego biotech trade association, and La Jolla's California Healthcare Institute.

Lobbying expenses

According to quarterly reports filed with the California Secretary of State, 16 pharmaceutical companies and trade associations spent $1.08 million in lobbying expenses between January and March -- up from $828,338 spent during the same period in 2003.

The drug industry also contributed $325,000 to Gov. Arnold Schwarzenegger's campaign and various committees.

"To say that the drug companies have greased the Legislature would be an understatement," said Jerry Flanagan, a spokesman for the Foundation for Taxpayer and Consumer Rights, which supports the bill package.

Flanagan said the Democrat-controlled Assembly is torn between wanting to support a "populist" package of bills that will help them retain seats in an election year and concern about losing the financial support of the drug industry.

"That is the dance that is happening now over the next few days," said Flanagan.

Along with the Frommer bill, another measure would allow small-business owners and uninsured patients to join a bulk drug purchasing pool.

Still another bill would require the state auditor to review the procurement practices of any state agency that buys drugs, in part to ensure that rebates offered by drug manufacturers are collected by the state.

Similar measures are also pending in the state Senate.


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