By Lisa Seachrist

Washington Editor

WASHINGTON - Faced with extensive publicity about bus trips to Canada to buy lower priced prescription medicines, Sen. Jim Jeffords (R-Vt.), chair of the Senate Health, Education, Labor and Pensions (HELP) Committee, convened a hearing to discuss legislation he's introduced to give pharmacists and wholesalers the right to import medications from countries where the costs are lower.

Entitled the Medicines Equity and Drug Safety Act of 2000, or MEDS Act, the bill would result in applying a global economy to the pharmaceutical industry in an attempt to relieve the high prices Americans lacking drug coverage pay, Jeffords said.

"The MEDS Act is not the only solution, and it may not be the best solution to the problem of access to affordable prescription drugs," Jeffords said. "I strongly believe we need to enact a broad prescription drug benefit, and I believe we need to find ways to encourage more insurance coverage for more Americans that covers the costs of drugs. But this is a positive, bipartisan measure that we can implement now that will bring prescription drug prices down for all Americans."

The MEDS Act is just the type of legislation the pharmaceutical and biotech industries oppose. Because most other countries establish their drug prices as a result of price controls, the companies view the measure as a de facto price control that would limit the amount of money available for research and development and capital investment into early-stage biotechnology companies.

"We believe that solutions involving any scheme that includes price controls, direct or indirect, are inadequate, unnecessary and counterproductive," said Paul Abrams, CEO of NeoRx Corp., on behalf of the Biotechnology Industry Organization (BIO). "We applaud the efforts of this committee and others in Congress for raising the critical matter of improving seniors' access to medicines, but we must be certain that the most life-enhancing and cost-effective therapies for seniors and others - future breakthrough products for diseases such as cancer, osteoporosis, Alzheimer's disease, Parkinson's disease, diabetes, heart disease, stroke, Lou Gehrig's disease and others - that are currently being researched and developed by biotechnology companies do not become the victims of well-intentioned, but inappropriate, solutions to that problem."

Nevertheless, the image of seniors crossing the border into Canada and Mexico to buy prescription drugs at a significantly reduced price has given a number of politicians pause. Sen. Slade Gorton introduced legislation to apply the 60-year-old Robinson-Patman Anti-discrimination Act to prescription drug sales in other countries. The Robinson-Patman Act was enacted to regulate interstate commerce by preventing manufacturers from undermining one business by selling the same product to a competitor at discounted rates, unless the price difference is due to legitimate quantity discounts.

"They are other ways to achieve this goal," Gorton told Jeffords. "For example, the bill you have introduced, Mr. Chairman, and a similar bill introduced by Sen. [Byron] Dorgan [D-N.D.] would allow pharmacists and wholesalers to re-import medicines that are approved by the FDA and manufactured in FDA-approved facilities. It's simply ridiculous that once those drugs leave our border they are instantly much, much cheaper."

Dorgan noted one of the main objections of the pharmaceutical industry to a bill allowing the re-importation of prescription medicines is that it would violate the "chain of custody" requirements and the safety of the products couldn't be assured. Dorgan said, "That's a specious argument and everybody knows it."

In addition, Dorgan took issue with the industry's assertion that lower drug prices for Americans would hamper research. He said the implication of the argument was the drug industry's profits were already minimal. He dismissed the notion, citing a Fortune list of the most profitable industries in the country showing the pharmaceutical industry's profitability outranks other leading industries and makes it the "envy of the corporate world."

"My goal is to force the re-pricing of drugs in this country," Dorgan said.

Alan Holmer, president of the Pharmaceutical Research and Manufacturers of America (PhRMA), acknowledged that research and development would continue if pharmaceutical companies were forced to lower prices, but also pointed out the effort would enfeeble the vigor of the R&D process. In addition, he said the biotechnology industry probably wouldn't survive the effort.

The debate over the cost of prescription drugs also included the effects of direct-to-consumer advertising. Stephen Schondelmeyer, head of the department of pharmaceutical care and health systems at the University of Minnesota in Minneapolis, noted the pharmaceutical industry spends twice as much money on advertising and marketing as it does on research and development. He said the end result of the direct-to-consumer advertising is an incentive for patients who have drug coverage to go to their doctors to request drugs, a process that increases the number of prescriptions delivered to patients just to satisfy a desire, while also boosting doctors' fees as a result of office visits.

Patricia Danzon, Celia Moh professor at the Wharton School of Business in Philadelphia, acknowledged this point even though she argued against the wisdom of imposing any drug price controls in the U.S.

"Where there is largely third-party payment, the efficacy of advertisement is enhanced because [the patients] aren't paying the full costs," Danzon said.

While the senators focused on the price of prescription drugs, both PhRMA and BIO argued that lack of coverage is the key issue.

"Ideally, a prescription drug benefit would occur in the larger context of Medicare modernization," Abrams said. "The public's focus on drug costs reflects the importance of new therapies and people's increased need for better access to them. However, the policies that we consider putting into place today must assure people have access to the drugs currently available and to the innovative drugs of tomorrow."