Misguided drug plan

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


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


* 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


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.

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