Clif Cleaveland: Reducing prescription drug prices is an uphill battle

Prescription drugs are eating holes in the pocketbooks of many Americans. Consider:

A man with asthma and a high-deductible health insurance plan must pay more than $300 for an inhaler to control his symptoms. A cancer patient with Medicare Part D coverage for prescription drugs had out-of-pocket expenses of more than $12,000 for chemotherapy in the past year.

Despite publicity by the pharmaceutical industry that discount coupons and assistance programs are available, most consumers do not qualify. Insured patients must cope with higher deductibles and copayments for necessary drugs. Uninsured patients may go without.

If prescription drug prices are to be reduced, either enhanced competition or price controls or some combination of the two will be necessary.

Competition can occur if existing laws regarding generic medications are enforced. Waiting times for approval of generic drugs must be reduced. Pharmaceutical companies must not be permitted to pay producers of generic drugs to delay marketing of their lower-cost products. Drug companies also must be prohibited from buying out generic competitors, thus creating a monopoly.

The majority of advanced, industrialized countries have some form of cost-control for prescription drugs, which are regarded as a public utility. Consequently, these agents are much less expensive outside the U.S.

Unfortunately, congressional action is needed and, thus far, Congress has shown little interest in tackling the costs of prescription drugs. A powerful lobby for pharmaceutical manufacturers is dedicated against any reform that threatens profits.

But a different approach to moderating drug costs might be enacted in November in California.

On election day, the state will vote on Proposition 61, the Drug Price Standards Initiative. The measure was promoted initially by a Los Angeles-based AIDS foundation. Sufficient signatures were gathered on petitions to place the measure on the ballot.

If approved, Proposition 61 would require state agencies to purchase prescription drugs at the same cost paid by the U.S. Department of Veterans Affairs. The federal government has established an upper limit for drug prices paid by the VA for the 9 million veterans who qualify for comprehensive care. The VA has negotiated additional discounts for drugs the agency purchases for its official list of the medicines that may be prescribed. These prices are substantially below those paid by most consumers.

Proposition 61 would apply to the 4.4 million of California’s 39 million residents whose health care is paid by the state. Included are 3 million Medicaid (Medi-Cal) patients who are in fee-for-service plans, state employees and retirees, teachers and students in state university systems and prisoners.

Supporters argue that the measure would reduce drug prices and save the state more than $5 billion over 10 years. Opponents contend the measure would be impossible to implement and would decrease the availability of some medications.

Led by drug companies, opponents have raised more than $80 million to finance a campaign to defeat the measure. Although the number of patients affected is relatively small, opponents recognize that Proposition 61 could serve as a model for citizen initiatives to reduce drug prices in other states.

Another uncertain prospect for lower drug costs appeared in an ad in the New York Times of Sunday, Sept. 11. Allergan, a pharmaceutical company headquartered in Dublin, Ireland, published a “social contract with patients” (www.allergan.com/socialcontract). Among its commitments are limits on price increases, a promise to work with policymakers to facilitate access to its products and a pledge to avoid “price gouging actions or predatory pricing.”

If a contract such as this were adopted industry-wide, the pharmaceutical companies would acknowledge a social responsibility to assure affordable access to their products. This would determine if voluntary restraint in pricing could lead to meaningful savings for patients.

The present upward spiral of prices for established and newly developed drugs cannot be sustained. Will government action or responsible pricing by manufacturers bring relief to patients struggling to afford their necessary medications? I bet on the former as consumers step up the pressure on their representatives.

Contact Clif Cleaveland at ccleaveland@timesfreepress.com.