Treating the Ills of Costly Drugs
Corzine says government, drug makers must bargain
Tuesday, April 27, 2004
BY BETH FITZGERALD AND SUSAN TODD
Star-Ledger Staff
The pharmaceutical industry's leadership in the discovery of drugs is paid for in part by higher U.S. prices, said Sen. Jon Corzine. But shipping medicine in from Canada is not the solution, he said.
Instead, the New Jersey Democrat said the government ought to negotiate discounted drug prices from pharmaceutical companies on behalf of the nation's 40 million Medicare recipients. In a meeting with business editors and reporters at The Star-Ledger, he said the money saved could be used to subsidize basic research by drug companies, which have long maintained higher prices are needed to develop medicines.
The problem with the Medicare prescription drug benefit passed by Congress last year is it puts purchasing in the hands of health insurers and managed care companies that will begin marketing a government-subsidized drug benefit in 2006, he said.
Corzine thinks better prices could be negotiated -- and more tax dollars saved -- if Medicare exercised the bulk-buying power of the Veterans Administration.
"The VA can negotiate because they are a big buyer, and we need to use economic leverage," he said during an hour-long question-and-answer session. "I would offer greater subsidies to the pharmaceutical industry and access to research dollars to make up for some of the cash flow, but I would like to see it absolutely held accountable that it was going into research for new drugs."
And drug makers need more government support for basic research, he added. The industry estimates it costs an average of $800 million to see a medicine through from discovery to approval by the Food and Drug Administration.
"We're not getting the kind of creation of new initiatives on drugs now out of the drug industry," Corzine said. "The biggest problem we have right now, and the reason the merger mania is going on, is that actually we are not getting the results out of their efforts."
Drug price controls imposed by the Canadian government make U.S drugs cheaper in Canada than they are in the United States, which encourages the re-importation of drugs from Canada. In effect, the U.S. senator said, we are importing price controls from Canada because Congress won't impose price controls of its own.
"While I am very sympathetic with the re-importation concept, if we want price controls in this country, we ought to vote for price controls," he said.
Joel Cantor, director of the Center for State Health Policy at Rutgers, said in his comments yesterday, Corzine appeared to be challenging the drug industry's standard argument that you can't have first-rate research without high drug prices.
"Everybody wants to see continued medical progress, and frankly the industry has sort of played the innovation card in fighting off price controls," he said. "Politically, this would be an attempt to diffuse that."
The U.S. pharmaceutical industry already pumps $33.2 billion a year into research for prescription drugs, according to the Pharmaceutical Research and Manufacturers of America, an industry trade group in Washington, D.C.
"We always welcome more resources to find cures for patients," Court Rosen, a spokesman for the trade group, said of Corzine's proposal.
Pfizer, the world's largest drug company, which spends about $7 billion a year on developing drugs, declined to comment on the specifics of the senator's proposal. But Pfizer spokesman Stephen Lederer defended the company's investment in drug development.
"The reality is we have a system that basically is now an American success story, the discovery and development of innovative medicines," he said. "It's developed some astonishingly new, valuable drugs. We think we know how to do it, and we think we know how to greatly improve and maintain productivity."
Beth Fitzgerald can be reached at efitzgerald@starledger.com or (973) 392-4111. Susan Todd can be reached at stodd@starledger.com or (973)-392-4125.