WASHINGTON _ Like the Energizer Bunny in those ubiquitous TVcommercials, the idea of a government commission to "review" drugprices keeps on going and going and going. Call it a BreakthroughDrug Committee, a Prescription Drug Payment Review Commission ora Prescription Drug Council, it's a concept with a seemingly endlesssource of energy on Capitol Hill.Ironically, these drug price review mechanisms seem inextricablylinked to a Medicare outpatient prescription drug benefit, a feature ofhealth care reform that could aid the drug industry in two importantways. First and foremost, a Medicare outpatient drug benefit wouldsurely turn down the political heat on prescription drug prices. The lackof a benefit has focused a white-hot spotlight on drugs while otherskyrocketing medical costs have gone unnoticed. Senior citizens whomust pay out-of-pocket for drugs are a powerful and vocal constituencyin favor of constraining drug prices."A retired person is much more aware of the $500 per year he or shespends on an anti-ulcer drug than on the $50,000 cost of an operation,"Lisa Raines, vice president of government relations for GenzymeCorp., told BioWorld.Second, a Medicare drug benefit could increase demand_though thisis debatable_for pharmaceuticals. Estimates vary but most analystsagree that drug utilization would rise as a result of the benefit, even ifonly slightly.However, the biotechnology industry would gladly forego thesepotential gains if the Medicare outpatient drug benefit were notaccompanied by formal scrutiny of drug prices. The industry hasargued that price review commissions, councils and committees, in anyform and by any name, will be harmful to the development of newdrugs and deadly to the industry.As a result, the Biotechnology Industry Organization has supported aprescription drug benefit for Medicare while vehemently opposing anyform of price review or negotiated rebates for drugs purchased byMedicare. But that position does not address the government's fearsthat uncontrolled drug expenditures could bankrupt the system.Judith Wagner, an analyst at the Office of Technology Assessment,epitomized the Clinton administration's position on a Medicareoutpatient prescription drug benefit at a recent American EnterpriseInstitute conference on health care reform in Washington."A fee-for-service prescription drug benefit for Medicare would invitepharmaceutical companies to raise prices for existing drugs andintroduce new drugs at high prices," Wagner said. "You must havesome form of price controls with a fee-for-service plan or the costs willspiral just as they have in other fee-for-service government healthprograms."All Medicare benefits, such as hospital and doctor services, aredelivered on a fee-for-service basis. (Fee-for-service means that billsare submitted directly to the government for reimbursement, with noneof the bargaining that goes on in a managed care setting.) Most of thosewho support a Medicare prescription drug benefit have assumed thatthe benefit would be delivered in the standard fee-for-service fashion.And there is certainly a precedent for price review commissions inaiding the delivery of Medicare's fee-for-service benefits: thePhysician Payment Review Commission advises Congress aboutdoctors' fees and the Prospective Payment Review Commissionreviews prospective payments to hospitals.Sen. David Pryor (D-Ark.), a vocal critic of drug prices and a closefriend of President Clinton, has advocated a similar system forprescription drug payments. "The financial viability of any reformedAmerican health system that includes coverage for prescription drugsdepends on implementing mechanisms to restrain prescription drugcosts," Pryor said at a hearing on international drug prices last week."Giving pharmaceutical companies a blank check could bankrupt thesystem."The biotechnology industry won an early victory in the drug pricereview battle when Rep. John Dingell (D-Mich.) pledged to delete abreakthrough drug committee from the Energy & CommerceCommittee's health reform bill last April. But Energy & Commercenever did agree on a health care bill.Instead, House Majority Leader Richard Gephardt (Illinois) meldedbills from the Ways & Means and Education & Labor Committeeswhen he crafted the Democratic leadership bill introduced on Friday.As a result, the leadership bill contains a Prescription Drug PaymentReview Commission lifted directly from the Ways & Means bill.The price commission remained in Gephardt's bill despite two letters,signed by a total of 33 of his fellow Democrats, calling for its removal.Gephardt and House whips must win the support of 218 of the House's256 Democrats, a prospect some call unlikely. All 178 HouseRepublicans are expected to oppose the Democrats' bill. (The Housealso has one Independent for a total of 435 members.)And even if the House leadership bill passes, it must be melded withthe Senate leadership bill in conference. Significant revisions couldtake place at that stage in the game.The prospect of a drug price review mechanism still lurks on the Senateside. Although Senate Majority Leader George Mitchell (Maine) isworking from two bills that don't have drug price commissions, he canadd things during the melding process. He was quoted in news reportsover the weekend as saying that his plan, which will be introducedtoday, does contain a Medicare outpatient prescription drug benefit.Ominously, industry insiders say they believe that Pryor drafted theMitchell bill's benefit scheme. But the Senate bill could easily falter onthe thornier issue of employer mandates, thus jettisoning health carereform from this Congress's legislative agenda.Regardless of the fate of specific health care reform bills this year,many believe that criticism of drug prices will not cease until there isan outpatient prescription drug benefit for Medicare recipients.Addressing the government's fears about uncontrolled Medicare drugexpenditures while insuring the continuation of drug research anddevelopment appear, for now, to be irreconcilable goals."If the original Medicare program had included a drug benefit, I don'tthink we'd be facing half of these problems today," said AlisonTaunton-Rigby, president and chief executive officer of Mitotix Inc. inCambridge, Mass. "There's no good answer to this one, it's reallytough." n
-- Lisa Piercey Washington Editor
(c) 1997 American Health Consultants. All rights reserved.