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Press Release Wednesday, October 18, 2000 |
Contact: |
WASHINGTON, D.C. -- The U.S. Senate is considering the "Medicine
Equity and Drug Safety Act of 2000" as part of the FY2001 agriculture
appropriations bill. This legislation would allow drug wholesalers
and pharmacists to reimport prescription drugs from certain
designated foreign countries under some conditions. The House passed
this provision in similar legislation by a vote of 340-75 on October
11.
Although the legislation is a clear attempt to address the rapidly
rising cost of pharmaceuticals in the United States, Consumers Union
believes the legislation falls far short of what consumers truly need
from Congress - meaningful relief from overly burdensome prescription
drug prices.
What would the reimportation of prescription drugs mean for
consumers? If the bill becomes law, it appears unlikely that it would
benefit consumers because provisions added to the bill virtually
guarantee failure.
The Problem: Rising Cost to U.S. Consumers of Prescription
Drugs
· Due to the growing reliance on prescription drugs, the total expenditures on pharmaceuticals are increasing between 15 and 20 percent per year.· U.S. drug prices are rising at an annual rate of 6.1 percent as of early 1999, a rate 2.4 times as fast as the Consumer Price Index.
· According to the Kaiser Family Foundation, the nation's prescription drug expenditures were $91 billion in 1998 and are projected to be $243 billion in 2008.
· 17 percent of all Americans and 42 percent of uninsured Americans recently reported not filling prescriptions for financial reasons according to the Boston University School of Public Health, citing Health Affairs.
· According to Consumers Union's recent report on health costs entitled The Health Care Divide, 51 percent of people 65 and over have out-of-pocket health care costs greater than 10 percent of their income, largely because of prescription drug expenditures.
The Proposed Solution: Reimportation of Drugs from Abroad
According to many estimates, consumers in the United States pay
sharply higher prices for prescription drugs than purchasers in other
industrialized nations. However, under current law, only the drug
manufacturers may reimport drugs from overseas. However, this
legislation would amend the Federal Food, Drug, and Cosmetic Act to
allow wholesalers, as well as licensed pharmacists, to import certain
"covered" products. The legislation requires the Secretary of Health
and Human Services (HHS) to come up with regulations that would:
· Under certain specific circumstances, allow the reimportation of FDA-approved drugs made in the U.S. and abroad (limited to the countries of Australia, Japan, New Zealand, Switzerland, South Africa, the European Union, and the European Economic Area, and other areas as designated by the Secretary of HHS· Require the testing of imported product by the importer or manufacturer for authenticity and degradation, and impose record-keeping requirements on importers to enable the tracing of product, to identify the origin of the product, and including the price paid and price sold by the importer.
Problems with the Proposed Solution
The legislation contains requirements that likely would prevent
the bill from ever taking effect or seriously threaten the chance of
any participation by wholesalers and pharmacists. This legislation
will not become effective until and unless the Secretary of HHS
demonstrates that it will: (i) pose no additional risk to consumers;
and (ii) result in a significant cost reduction in the prices paid by
consumers for affected products. In addition, this legislation would
sunset five years after promulgation of the final rules. These
factors and other elements within the legislation are problematic for
the following reasons:
· It would be very difficult for the Secretary of HHS to demonstrate that the program would pose "no additional risk" to the public. In fact, the legislation requires the Secretary to conduct a study analyzing the effect of the provision on any increases in the incidence of violative products imported under this provision. However, this study will not be conducted until after final regulations are implemented.· There is no guarantee that just because pharmacists and wholesalers are able to buy reduced-cost drugs overseas, they will pass along the savings to the consumer.
· Although it is crucial that the FDA receive adequate funding to enforce the provisions of this legislation, it is unclear that it will receive adequate funding for next year or in future years. Without sufficient funding there is a great risk that the FDA will have inadequate means to police for adulterated, misbranded, or counterfeited products.
· The legislation contains extensive record-keeping requirements. Even if the other hurdles are overcome by HHS, and final regulations are implemented, there may be little incentive for wholesalers and pharmacists to invest in the creation of a comprehensive importing and reporting program when their imports may be disallowed five years down the road.
· Importers are required to use FDA-approved labels provided by the manufacturer. If drug manufacturers refuse to provide labels to the importers, the imported drugs could not be sold under this provision.
Additional Steps Congress Should Take
Congress must take a comprehensive look at pricing of
pharmaceuticals and how to increase the accountability of this
industry to the public. It should explore ways of putting
competition to work to help drive pharmaceutical prices lower to the
benefit of Medicare beneficiaries, the uninsured, and people with
health insurance. Congress should also build a prescription drug
benefit into the Medicare program, but this program should not
include a blank check to the pharmaceutical industry to increase its
prices without limits.
Consumers Union, publisher of Consumer Reports magazine, is an independent nonprofit testing, educational and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition and other consumer concerns. Since 1936, our mission has been to test products, inform the public and protect consumers.
