Thursday, January 11, 2007

If you thought earmarks were fun to watch, just wait until the government gets in the business of “negotiating” drug prices.

The Democrats — and Republicans such as Sens. Olympia Snowe, Susan Collins and Arlen Specter — have proclaimed that having Medicare set the price of medicines for 50 million Americans is just like what Costco or Wal-Mart does to get good prices for customers. (Democrats trash Wal-Mart except when it comes to being a metaphor for price controls.)

I wonder what Wal-Mart or Costco would say if Democrats announced they were going to use the military PX model to lower the price of food, HDTVs and toilet paper for 260 million Americans? Is that using the buying power of the government to lower prices to make housing, energy and food affordable? That’s what Hugo Chavez said when he nationalized private companies in Venezuela.

Democrats depict negotiations as something akin to loss leaders and weekly circulars. But here’s what a real drug price negotiation looks like: Try to follow the Veteran Affairs health system reasoning for limiting patient access to one form and one dosage amount of the cheapest type of blood pressure medication called angiotensin receptor blockers (ARBs).

“With respect to the second possibility — the use of less than full dosages for new patients properly receiving an ARB who are ramping up to the target level, or the use of less than full dosages for patients who prove unable to achieve the target dosage levels — the VA explains that, as yet, it has no data on how many patients will fall in this category. Without this data, we know of no reason that the VA should be required… to estimate what percentage of patients will not be able to achieve the target dose strengths of these drugs for treatment of diabetic nephropathy… The data does not even indicate the specific condition for which patients received an ARB.”

Translation: We don’t care what works for you; you’ll take what’s on sale.

On top of that consumer-friendly thinking, the VA has no local pharmacies, only depot-like dispensing centers. Here’s a note from a satisfied customer who shopped at the flagship store of Pelosi’s Price Club:

“I received a call from my VA doc one day, saying the VA pharmacy no longer carries the slow release Oxycontin I had been taking for sometime. It’s one of the few I found that works with neurological, (hot ice pick stabs) I get & chronic pain. His message said they were stopping the med, ‘immediately’ & prescribing ‘methadone’. I refused it & was told to come in & discuss it with the Doc. (Another 300 mile trip). I was told by the Doc The VA no longer carries it in our region…”

Will the speaker give this guy a rain check for his Oxy? Or maybe he should sue Families USA for false advertising. After all, this “voice of the healthcare consumer” cooked up the Democrats’ claim that every drug in the Medicare plans is available in the VA but for half the price. To make amends, Mrs. Pelosi should put Families USA mouthpiece Ron Pollack on TV with a truthful ad about their proposal: “The Pelosi Prescription Price Plan: No drugstores. Half the drugs. Twice the pain.”

Democrats claim that government purchases of vaccines and Cipro show that direct government negotiations succeed. Not even Families USA is that deceptive.

First, the Vaccines for Children program — Sen. Hillary Clinton’s dry run for national health care — froze prices on childhood shots — and demanded bulk purchases. That policy was responsible for the exodus of several large drug companies from the business. A series of shortages of pediatric vaccines and flu shots ensued until President Bush removed the price caps. Now most vaccine research is in the adult market where there’s no bulk purchase, yet.

After the anthrax scare, Sen. Charles Schumer demanded the government seize the patents for Bayer’s Cipro if Bayer didn’t sell it to the Department of Health and Human Services at cost. Bayer capitulated. (Some people will do anything to get Mr. Schumer to shut up.) Today companies still largely shy away from bulk purchase deals with the government out of concern that they will be next.

It doesn’t take a village to figure out that government prices will become a floor upon which companies will walk — away from negotiating or selling to government altogether.

Instead, companies and patient groups will go right to Congress to create their own special deals and exclusions. It’s already happening. Apparently Democrats, to win support of the pharmacists lobby, have said that price cuts from restrictive formularies would free up money to pay higher dispensing fees (in the non-existent drugstores).

That’s not using the purchasing power of millions of American. That’s Congress peddling influence to create earmarks.

Which is what Democrats really mean by direct negotiations with drug companies.

Robert Goldberg is vice president for strategic initiatives for the Center for Medicine in the Public Interest.

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