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Wrongheaded Medicare "Reforms" By: Peter Pitts
FrontPageMagazine.com | Thursday, October 23, 2008


Dennis Kucinich is campaigning for a radical overhaul of the Medicare prescription drug program. The erstwhile Presidential hopeful claims that private pharmaceutical companies have “failed” to provide Medicare enrollees with effective and affordable drugs.

In August, Kucinich introduced the “Medicare Drugs for Seniors Act,” a measure that would completely scrap the Medicare Part D drug benefit. Instead, it would allow program participants to buy prescription drugs from certain foreign countries where prices are lower due to price controls. The bill would also institute stringent price controls here in the U.S. on drugs developed using public funds. Finally, it would allow Medicare to directly negotiate drug prices with pharmaceutical manufacturers.

Kucinich’s opposition to Medicare Part D stems from a knee-jerk aversion to free-markets and a dogmatic attraction to big-government controls -- not an honest assessment of the facts. And the “solutions” he’s pushing will likely choke off the next generation of life-saving pharmaceuticals.

Consider the fact that 87 percent of Part D enrollees are happy with the services provided, according to a December 2007 Harris Interactive poll. America’s Health Insurance Plans reports that 75 percent of enrollees have saved money on their prescription drug purchases.

The projected cost of Part D over the next decade has dropped $117 billion since last summer -- from $915 billion to $798 billion.

Also, the program has reduced out-of-pocket healthcare expenses for the average enrollee by 17 percent, according to a study published in the February 2008 edition of the Annals of Internal Medicine.

The truth is that Medicare Part D is working as planned: Private drug producers are forced to compete against each other for customers. And that competitive pressure has brought down drug prices across the board.

As the acting administrator of the U.S. Centers for Medicare and Medicaid Services recently concluded, “Overall, costs for beneficiaries and taxpayers are considerably lower than original projections, enrollment continues to rise, and customer satisfaction remains very high.”

That sure doesn't sound like a “failed” program.

Kucinich’s alternative to Medicare Part D starts with unfettered foreign drug importation. This facet of his plan is just plain dangerous.

For starters, drugs manufactured abroad pose a substantial health risk. The World Health Organization estimates that around 10 percent of the global drug supply is counterfeit.

Canadian pharmacies -- likely to be a popular source for foreign meds -- often mislead customers about where their drugs were made. In 2004 the FDA examined several popular prescription drugs sold from online Canadian drug stores. None of the pills had actually been manufactured in Canada, and they all failed federal safety standards.

What's more, drugs are cheaper abroad because foreign governments directly control prices. If American customers start buying at artificially low prices, drug manufacturers will see their revenues drop precipitously. Many will go bankrupt or leave the market entirely. And that means fewer drugs for everyone.

Kucinich’s plan to impose price controls on government-financed drugs will have the same dampening effect on pharmaceutical investment as importation.

According to a study from Tufts University, among 35 widely prescribed drugs that were financed with taxpayer dollars, none would have been developed without private sector research. For 28 of those drugs, private sector research led to improvements in the drug's clinical performance or manufacturing technique.

Price controls make drugs less profitable or -- worse -- unprofitable, which in turn makes them a less appealing prospect to private investors. If those investment dollars dry up, pharmaceutical companies will be unable to invent new cures.

It’s a similar story with allowing Medicare to “negotiate” drug prices. In the past, the government has used that power to simply dictate artificially low prices. That has lead to drug scarcities and reduced access to new drugs for patients enrolled in public healthcare programs.

The Veterans Administration’s health system, for instance, negotiates drug prices. The result: Less than 40 percent of the drugs approved by the Food and Drug Administration in the 1990s and just 19 percent of the drugs approved since 2000 were available to VA patients in 2005, according to a study from Columbia University Prof. Frank Lichtenberg.

Dennis Kucinich’s bill is a non-solution to a non-problem. Medicare Part D is a success. And the Kucinich’s plans to “fix” it would do untold damage to the domestic drug industry, and keep breakthrough pharmaceutical treatments from reaching the patients who need them.

Peter J. Pitts is President of the Center for Medicine in the Public Interest and a former FDA Associate Commissioner.


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