If politics got real...the debate over costly prescription drugs would turn to more fundamental solutions like breaking up the pharmaceutical industry's patent monopolies, which generate soaring drug prices, and rewarding consumers for the billions of tax dollars spent to develop new medicines. As a business proposition, that sounds radical, but it would actually eliminate outrageous profit-skimming at taxpayers' expense and liberate lifesaving medicines from inflated prices so millions of people worldwide could afford the health benefits.
At present, the government picks up the bill for nearly all basic research and development, mainly through the National Institutes of Health. Then private industry spends about $25 billion a year on more R&D--essentially taking NIH discoveries the rest of the way to market. The companies mostly do the clinical testing of new compounds for safety and effectiveness, then win regulatory approval for the new applications. This is one instance where a bigger role for government, by taking charge of the scandalous pricing system, could produce vast savings for the public--as much as $50 billion to $75 billion a year.
The National Institutes of Health and independent scientists working with NIH grants generally do the hard part and take the biggest risks, yet there is no system for sharing the drug companies' subsequent profits with the public treasury or for setting moderate prices that don't gouge consumers. Instead, the drug industry reaps revenues of $106 billion a year, claiming that it needs its extraordinary profit levels in order to invest heavily in research. The companies are granted exclusive patents on new products for seventeen years (or longer if drug-company lobbyists persuade Congress to extend them). Meanwhile, the manufacturers collect royalties (and less profit) on the very same drugs under licensing agreements with Europe, Canada and other advanced nations where the governments do impose price limits. Thus, Americans pay the inflated prices for new medicines their own tax dollars helped to discover--while foreign consumers get the break.
Years ago, although reform was mandated by law, NIH abandoned its efforts to work out a system for moderating US drug prices--mainly because the industry refused to cooperate and had the muscle in Congress to get away with it. Now that soaring prices have inflamed public opinion again, Dean Baker of the Center for Economic and Policy Research proposes a more radical solution. NIH should be given control over all drug-research policy, Baker suggests, and Congress should put up public money to cover the industry's spending (probably less than $25 billion because marketing costs get mixed into the research budgets as well as money spent to develop copycat drugs, which are medically unimportant). The exclusive patent system would be phased out, perhaps starting with cancer drugs and other desperately needed medicines whose prices are too high for poor nations to afford. For $25 billion or less in new public spending, brand-name drugs would largely disappear, but, Baker estimates, prescription costs for Americans would shrink by as much as 75 percent overall.
A less drastic solution, suggested by James Love of Ralph Nader's Consumer Project on Technology, would limit use of exclusive patent rights and, if needed, compel drug-makers to grant royalty licenses to other US companies to make and sell the same medicines, thus fostering price competition. Competing companies would be required to contribute a minimum percentage of revenues to R&D to maintain research spending levels. The government could also require companies to help fund government or university research.
The prescription-drug debate of Election 2000 is a long way from either of these visions for reform, but events may lead the public to take them seriously. Drug prices are inflating enormously. If Congress fails to make it legal, the bootlegging of cheaper medicines from Canada and other countries where the prices are controlled is bound to escalate, and the present system might break down from its own lopsided design. As a matter of public values, the discovery of new health-enhancing medicines ought to be shared as widely--and inexpensively--as possible, especially since public money helped pave the way to these discoveries. Jonas Salk never sought to patent his polio vaccine. He thought his reward was knowing how greatly his work had advanced all of humanity.
The number-one healthcare issue facing the country is not which prescription drug plan is best for seniors or whether a handful of patients will be able to sue their HMOs. It is the 44 million people, or nearly 20 percent of the population under age 65, who have no health insurance and, for many, no healthcare at all. The myth that emergency rooms provide all the care the uninsured require continues unchallenged. But the emergency room is not the place to get primary care, follow-up care or care for chronic conditions, which most people need. Federal law requires emergency rooms to stabilize patients. After that, they are sent on their way, especially if they have no money to pay for further treatment. When they are given prescriptions, 30 percent of the uninsured don't fill them because of the cost.
Rationing specialty care for the uninsured is common. In Washington, DC, the uninsured wait four months for an MRI and two months for a CT scan. In California, some counties have money to screen women for breast cancer but no money for treatment. During the four to seven years following an initial diagnosis of breast cancer, one national study shows, uninsured women are 49 percent more likely to die than women with insurance. Community clinics that treat the uninsured rarely have specialists on their staffs and resort to begging area physicians to help out--not always with success.
The Bush and Gore solutions do little to help the uninsured and a lot to keep the healthcare system safe for insurance companies, the AMA, employers and the pharmaceutical industry, all of which have shoveled money into their campaigns. Bush proposes an annual refundable tax credit (that is, one that's given even if a person owes no taxes) of up to $1,000 for individuals and $2,000 for families. His campaign literature makes tax credits sound ideal: "If a family earning $30,000 purchases a health insurance plan costing $2,222, the government will contribute $2,000 (90 percent)." Trouble is, most families can't buy insurance for $2,222. The average premium for a family policy is $6,740 and for an individual, $2,542. Gore calls for a credit equal to 25 percent of the premium. Using the average premium as a benchmark, that's about $1,700 for family coverage; a family wanting a policy would still have to cough up more than $5,000.
Tax credits, moreover, leave intact the ability of insurance companies to select good risks and exclude sick people who will cost them money. That, of course, is what the industry wants to protect--and is part of the payoff for its campaign largesse.
Both Bush and Gore would also fiddle with the Children's Health Insurance Program (CHIP) to boost coverage. CHIP has brought health insurance to some 2.5 million kids, but 10 million still have none. Bush's solution: Give the states more flexibility in administering the program. But many states have not even spent federal dollars already earmarked for them, and could be tempted into using the money for something other than insurance. Gore's solution: Stretch the eligibility rules to include children whose families have incomes up to 250 percent of the federal poverty level, or $41,000 for a family of four. But what if a family's income is above 250 percent, say $43,000? Gore's answer: tax credits.
Then there are medical savings accounts, which Bush likes and Gore doesn't. Congress now allows self-employed people and employees in small companies to buy MSAs, which are a combination high-deductible insurance policy and tax-deferred savings account. But at the end of 1999, only 45,000 policies of the 750,000 Congress authorized had been sold. Still, Bush wants to let more people buy them, a move that will spark interest mainly among the healthy, who won't need the savings account to pay for care, and the wealthy, who can assume the costs not covered by the large deductible and who will simply get another tax break.
The major battleground in healthcare, though, is over a prescription drug benefit for Medicare beneficiaries, with pharmaceutical companies replacing HMOs as this year's healthcare villains. Under Bush's scheme, the very poorest seniors would get help paying for the entire cost of a drug benefit. Individuals with incomes greater than $14,600 and couples with incomes up to $19,700 would get a partial subsidy. Bush would pump $48 million into the state pharmaceutical assistance programs to give free drugs to those with the lowest incomes. But more than half the states have no programs, and those that do lace them with restrictions.
Under Gore's plan, Medicare would cover 50 percent of the cost of prescriptions, first up to $2,000 and later up to $5,000, for seniors willing to pay a premium that would start at $25 a month. As with Bush's plan, seniors with very low incomes would get help. Both candidates offer help for those with catastrophic expenses: Gore's benefit would kick in after seniors have spent $4,000 on drugs, Bush's after they've spent $6,000 for all services. Neither, however, includes a way to control pharmaceutical prices. Controls of any sort are anathema to the drug companies.
The fight over whose plan provides the bigger benefit obscures the real fundamental Medicare issue, and that is the future structure of the program itself. Under the guise of "consumer choice," Bush wants to transform Medicare from a social insurance program with a defined benefit available to everyone into a voucher plan under which seniors would be given a fixed amount to buy whatever insurance they could afford. Even if a voucher were sufficient to pay for a policy today, there is no assurance that it would do so in the future. In effect, the Bush proposal could make seniors, rather than government, bear the cost of healthcare inflation. Gore speaks of putting Medicare in a lockbox, which presumably means he wants to maintain it as a social insurance program.
Unresolved in the candidates' discussions is the larger question: Is healthcare a right in America or a commodity available only to those who can pay? On this the public may be way ahead of its leaders. When the Kaiser Family Foundation asked people earlier this year if healthcare, like public education, should be provided equally to everyone, 84 percent said yes. The candidates, however, are listening to the special interests, whose money speaks louder than the people.
It took twelve years for the FDA to approve mifepristone--also known as
RU-486--and most of that time had less to do with medicine than with the
politics of abortion. Still, the late-September decision was a
tremendous victory for American women. In approving RU-486, the FDA
showed that science and good sense can still carry the day, even in an
The long delay may even backfire against the drug's opponents. In 1988,
when mifepristone was legalized in France, it was a medical novelty as
well as a political flashpoint. Today, it's been accepted in thirteen
countries, including most of Western Europe; it's been taken by more
than a half-million women and studied, it sometimes seems, by almost as
many researchers. By the end of the approval process, the important
medical professional organizations--the AMA, the American Medical
Women's Association, the American College of Obstetricians and
Gynecologists--had given mifepristone their blessing; impressive
percentages of Ob-Gyns and family practitioners said they would consider
prescribing it; thousands of US women had taken it in clinical trials
and given it high marks, with 97 percent in one study saying they would
recommend it to a friend. Against this background of information and
experience, the antichoicers' attempt to raise fears about the drug's
safety sounds desperate and insincere.
In a normal country, RU-486 would simply be another abortion method, its
use a matter of personal preference (in France it's the choice of 20
percent of women who have abortions, while in Britain only 6 percent opt
for it). But in the United States, where abortion clinics are besieged
by fanatics and providers wear bulletproof vests, mifepristone's main
significance lies in its potential to widen access to abortion,
especially in those 86 percent of US counties that possess no abortion
clinic, by making it private--doctors unable or unwilling to perform
surgical abortions could prescribe it, and women could take it at home.
It is unlikely, however, that Mifeprex, as the drug will be known when
it comes on the market, will prove to be the magic bullet that ends the
war on abortion by depriving antichoice activists of identifiable
targets. The nation has been retreating from Roe v. Wade for a
quarter-century, and a good portion of the patchwork of state and local
regulations intended to discourage surgical abortion will apply to
Mifeprex as well: parental notification and consent laws (thirty-two
states), waiting periods (nineteen states), biased counseling and
cumbersome reporting and zoning requirements. States in which
antichoicers control the legislatures will surely rush to encumber
Mifeprex with hassles, and small-town and rural physicians in particular
may find it hard to prescribe Mifeprex without alerting antichoice
activists. Doctors are a cautious bunch, and the anticipated flood of
new providers may turn out to be a trickle, at least at first. Abortion
rights activists should also brace themselves for a backlash from their
hard-core foes: Just after the FDA's decision was announced, a Catholic
priest crashed his car into an Illinois abortion clinic and hacked at
the building with an ax.
But in the long run, Mifeprex will make abortion more acceptable. In
poll after poll Americans have said that when it comes to terminating a
pregnancy, the earlier the better. Mifeprex, which has been approved for
the first forty-nine days after a woman's last menstrual period--when
the embryo's size varies from a pencil point to a grain of rice--may
well prove not to arouse the same kinds of anxieties and moral qualms as
surgical abortion. Then, too, Americans are used to taking pills. That,
of course, is what the antichoicers are afraid of.
We have the Bill of Rights and we have civil rights. Now we need a Right to Care, and it's going to take a movement to get it.
Research support for this article was provided by the Investigative Fund of The Nation Institute.
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