Contact FreedomWorks

400 North Capitol Street, NW
Suite 765
Washington, DC 20001

  • Toll Free 1.888.564.6273
  • Local 202.783.3870

Press Release

Misguided drug plan

01/20/2003

This piece originally ran in the Washington Times on Monday, January 20, 2003

West Virginia Gov. Bob Wise wants a Canadian-style system to
control pharmaceutical prices.

But if he gets his way, West Virginians will have fewer drug
choices and longer, more costly illnesses.

Faced with a state budget crisis, deepened by rising Medicaid
costs, Mr. Wise blames higher drug prices for West Virginia's fiscal
woes and wants drug-makers to charge the same prices set by the
Canadian government, not by the marketplace.

But Canada's rigid price-control system isn't the answer. Because
of its price-fixing, many of the newer and more effective
pharmaceuticals for illnesses like cancer and hypertension are
unavailable there.

The price of many medicines here is high, but they treat or
prevent illnesses that would cost people hundreds of thousands of
dollars more than the medicines themselves. Price controls that
impose disincentives to develop new drug treatments, or prevent the
best drugs from getting to ill patients, would make health care
worse, not better.

A study by economist Frank Lichtenberg at Columbia University
shows that every dollar spent on newer generations of drugs saved
four times that amount in hospital costs.

Citizens for a Sound Economy (CSE), a Washington-based free
market group that is lobbying against Gov. Wise's plan, explains
that "because prescription drugs are more often used for preventive
care, they stave off more debilitating, more costly medical
conditions requiring expensive and lengthy hospitalization. While a
$600 annual prescription for two leading cholesterol-reducing drugs
may seem expensive, it is the long-term effect of those drugs that
helps avert an emergency bypass operation and lengthy hospital stay
at an average cost of $300,000."

CSE has launched a public awareness campaign in West Virginia to
counter Mr. Wise's misguided proposals for a Canadian system. In
addition to a series of radio ads critical of the governor's plan,
it is sending "Canadian Health-Care First-Aid Kits" to state
legislators.

Included is a five-year calendar "so West Virginia citizens can
schedule their emergency surgery at a pace consistent with the
delays Canadian citizens must endure." "Wise's proposed solution to
West Virginia's crisis is nothing more than a hidden tax on drug-
makers - one that will force citizens to ultimately pay the price
through the drastic reduction of services and lack of availability
of life-saving drugs," said CSE President Paul Beckner.

In many cases, West Virginians will be forced to use cheaper
generic drugs that are often not as effective as original drugs or
the newer drugs that replace them.

But there is more in Mr. Wise's initiative than meets the eye.
The governor has had a long affiliation with Business for Affordable
Medicine, a fat-cat lobbying group whose members "will reap billions
of dollars in windfalls if more patients are forced to switch to
generic drugs," according to the CSE.

Mr. Wise's crusade to adopt Canada's price-control system ignores
some important facts, according to a CSE study. Among them:

* Some, though not all, drug prices are cheaper in Canada,
subsidized by taxpayers who on average send more than 35 percent of
their income to finance the government's welfare state programs.

"But when a government buys drugs, it must ration them. With no
private sector alternatives, patients have no choice but to accept
what their government - not their doctor - decides is best," says a
CSE spokesperson.

* If Americans were required to buy the same pills in Canada that
they bought here, they would end up paying 3 percent more, according
to a study by University of Pennsylvania professor Patricia Danzon.

The reason, according to the CSE, is that "generic drugs, which
account for half of U.S. consumption, are less expensive under the
competitive U.S. system than the price-controlled Canadian system."

* The Canadian plan that Wise wants to copy has a notoriously
poor health care record. Writing in the Canadian Medical Association
Journal, Dr. Richard Davies, a cardiologist at the University of
Ottawa, found that more than 1,500 people were on lengthy waiting
lists for heart bypass surgery. Some die before surgery can be
scheduled.

* As for Canada's drug program, a recent survey found that nearly
30 percent of British Columbia doctors reported that patients ended
up in the hospital because of government-mandated substitutions of
prescribed drugs.

Congress will no doubt be debating a prescription drug plan this
year. And there will undoubtedly be lawmakers here who, like Wise,
want to use Canada's system. That would be a monumental, and in some
cases deadly, mistake.

A market-oriented plan can be devised to help poor and low-
income people get the medications they need. This could be part of a
competitive prescription drug benefit system that lets consumers
shop around for the health-care coverage that suits their needs and
their pocketbook.

Such a plan should be part of a larger reform that gives
taxpayers a tax credit to offset their medical expenses, including
drugs.

The best way to keep down drug prices is to encourage competition
in the pharmaceutical industry and wider choices among public and
private benefit plans. The worst way would be a Canadian-style,
state-preferred drug list that prohibits doctors from prescribing
the most effective drugs on the market for their patients.

Donald Lambro, chief political correspondent for The Washington
Times, is a nationally syndicated columnist.