Institute for Policy Innovation Forum-Prescription Drug Price Control Battle

Federal News Service February 24, 2004 Tuesday

HEADLINE: INSTITUTE FOR POLICY INNOVATION FORUM

SUBJECT: PRESCRIPTION DRUG PRICE CONTROL BATTLE

PARTICIPANTS: MERRILL MATTHEWS, INSTITUTE FOR POLICY INNOVATION; SALLY PIPES, PRESIDENT AND CEO, PACIFIC RESEARCH INSTITUTE; PETER PITTS, ASSOCIATE COMMISSIONER, EXTERNAL RELATIONS, FDA; DR. DAVID GRATZER, TORONTO PHYSICIAN AND SENIOR FELLOW, MANHATTAN INSTITUTE; LOTHAR DUECK, CANADIAN PHARMACIST, PRESIDENT, COALITION FOR MANITOBA PHARMACY; DUANE PARDE, EXECUTIVE DIRECTOR, AMERICAN LEGISLATIVE EXCHANGE COUNCIL

BODY:

MERRILL MATTHEWS: I'm Merrill Matthews with the Institute for Policy Innovation. I want to thank you for taking the time to come join us here in our discussion on importation.

The reason we are holding this event today is that the National Governors Association, which is just finishing up their meeting here in Washington-a couple of governors decided they were going to hold an additional event, sort of a briefing on importation. They were going to be taking the position that we should be expanding exportation, that the FDA should, in essence, allow that so that their states could begin importing drugs from Canada.

We did not feel that that was going to be a fully balanced and fair presentation of what's happening with importation, the problems that we're facing, and so we decided we were going to bring together this event to try to give you a different picture of what's happening with some of the experts.

The issue, at least for me in large part, is safety. The governors holding the event later, I think, will be making the case that they can import drugs from Canada and keep them safe, that the American public and patients will be protected by doing that.

Now a year ago, I actually did not think that safety issue was a viable issue. I heard a lot about it and I thought I just-I'm just not sure that it's-that's true, and the reason is in part because I never saw it in the paper, I never heard about it on the television news, and if it's not in print and we don't see it in the news, it doesn't exist, right? And so I thought, I think this really is probably a bogus argument. But I decided I would take the time to look at what was happening with this issue in other countries, so for about a year, I've been scanning newspapers, periodicals, journals and so forth, about prescription drugs, counterfeits and so forth in a number of the other countries. My file now on this is about this thick. And I came within a few months to realize this is really a big issue in other countries where, when you go to other countries-India's is concerned that they-maybe 30 percent of their prescription drugs in the country are counterfeit. You get to Pakistan, it's 50 percent; China, it's 50 percent. When you get to Africa, they're looking at 80 percent counterfeit drugs.

They're all over there, right? Not always. Some of those drugs are coming here, and based upon what I've found in those newspaper headlines and things, I decided to put together this little booklet which is in your packet. It has about 16 questions, answering questions on importation or reimportation. There are basically-they're used interchangeably. They're not exactly the same thing, but they're used interchangeably.

But the second little section in this has some of the clips that I found from various papers and newspapers, BBC, articles from other countries and from the United States-just giving you some of the clips of some of the things that are happening about patients being hurt here, patients being hurt in other countries, the growth of counterfeit in other countries, and how those counterfeit drugs are making their way to the United States.

Let me take a second to tell you what this debate is not about. This debate is not about the safety of prescription drugs in licensed pharmacies in Canada. If I am in Canada and you are in Canada, I end up needing to go to a doctor, I get a prescription, I go to a brick- and-mortar pharmacy in Canada with a licensed pharmacist, do I feel the prescription drug that I am getting from that pharmacist is safe? Absolutely. There is no question about that.

That is not what this is a debate about. What's happening is we have a mentality in the United States in which-and this whole thing is fueled by this-that people believe that they are going online and able to buy the exact same drug that they could get from their local pharmacy, they're just able to get it from Canada or a website that claims it's from Canada at a reduced price. That's what is driving this whole debate.

What this event is about is misplaced trust; that is, our drug supply has been-in the United States has been so safe for so long that Americans just sort of naturally assume they're going to be safe in other places like Canada-even in Mexico. Now I find this amazing. I live in Texas, and in Texas we've had a long tradition of making jokes about going to Mexico. Texans don't-when they go to Mexico, they don't eat the food, they don't drink the water, but you get the prescription drugs and think they're safe? Think about the rationale that's going on there.

There is a presumption that if we get it from Canada, maybe even from Mexico, the drugs will be safe. In many cases it's true; in many cases it's not true. The problem is that we, as individuals, don't have the skills to know whether we're getting safe drugs or fake drugs. Even the FDA has to go and test the drugs because many times you simply can't tell. And as a result, people think they're getting drugs from these other places, and they may be getting the right drug; they may not be getting the right drug. But even in the age of the Internet, you don't know exactly what you're getting.

This is an article from Prevention magazine. It talks about a study that was looking at websites that claimed to be Canadian. In a global option study of 45 e-pharmacies that either appeared Canadian or advertised as Canadian, five were registered in the U.S. and three in Barbados. One was registered in Mexico and five were of unknown origin.

Another global option study of 432 Internet sites that contained either Canada or Canadian and a reference to pharmaceuticals in the Web address found that more than half were located outside of Canada. The FDA was-the FDA has received consumer complaints about drugs ordered from supposedly Canadian websites but that arrived with return addresses from overseas locations such as India.

It is about misplaced trust. It is about states becoming surrogate FDAs. If you read the articles on this on what some of the states are wanting to do, they are basically saying we'll go up to Canada and we will check on these pharmacies, we'll check on the sites and the-and make sure that they are safe, and that way we will be able to ensure the safety of the drugs. Indeed, Mayor Albano of Springfield, Massachusetts, went up to CanRx, I believe it was, looked around a little bit-Mayor Albano has no medical training whatsoever-came back to the United States and lectured the FDA about the fact that he felt they were safe.

You have politicians stepping in, basically taking over the role of the FDA. The FDA is as good as any-has the best experts on checking the safety of drugs in the world, and you've got people with no expertise lecturing them about the safety of drugs.

Finally, this is about states promoting importation and, in essence, giving a veneer of justification for people doing it. If you're somebody out there looking at the news, and you see a couple of governors saying, we think that we can import drugs from Canada or from other countries and that we can maintain and assure the safety of those drugs, you as a person watching the news are likely going to think, ah, this really isn't a safety issue. This is probably just fine. I can simply go on the Internet and I can do the same thing they're doing. In essence, by promoting these importation proposals that several of the states and some of the cities are looking at doing, they are giving Americans justifications for being able to go and do it themselves, and I think exacerbating the problem significantly.

But safety isn't the only issue here. There is also the issue of economics and price controls, and in order to touch that, I'm going to introduce Sally Pipes, president and CEO of the Pacific Research Institute in San Francisco.

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MS. PIPES: I would now just like to take a brief interruption and introduce Congressman Darrell Issa, Republican from California from my state to come and say a few words.

Welcome, Congressman Issa.

REPRESENTATIVE DARRELL ISSA: Thank you. In Congress we often say by the time you get up and somebody has previously laid out all the issues that everything that can be said has been said but just hasn't been said by me. So I will-I'll try not to -- (laughter) -- well, it is what we say.

But this is an important issue, and it's one that I'd like to add my voice to the chorus that's here today. It is easy to be a populist. A populist is somebody who tells people what they want to hear. And there are many in Congress who are telling the public what they want to hear-that there's a panacea for less expensive drugs.

As a former manufacturer, a patent holder of more than 30 patents of my own, I'm well aware there is no substitute for research and development, there is no substitute for the hard work it takes to find innovative new products. Additionally, as somebody who has seen the plaintiffs' trial lawyers at work in California, I'm very well aware that if you prescribe drugs you take a risk; if you manufacture them you take a risk exponentially greater, and that's part of the cost of American health care.

There are some things that would work that they do in Canada. We in the United States could choose to reduce the value of companies' patents by simply saying sell us or we will negate the patent. That does work in Canada. It is a threat from a small market who wants to control prices, but Canada is not the source of great innovation that the United States is, nor does Canada have as much to risk if those great innovations don't occur. So I recommend very much against it. It's something that the Congress could consider but should reject.

I believe in innovation and I believe it comes with a free market, one in which if you fail your investors pay and pay heavily for their-in believing in you when you couldn't deliver. On the other hand when a great and bold new product is achieved there should be no limit to the ability of that company to derive not only capital to reinvest their-reimburse their investors, but in fact, and more importantly, to reinvest in future products-something that the industry has done for a long time.

Last but not least, while the populists are telling us all that there is a cheaper solution, I have been in my manufacturing days repeatedly a victim of counterfeit products. Now counterfeit products in the electronics industry means that somebody gets a substandard product and then returns it to me as a defective, madder than hell when I have to tell them it isn't mine. Perhaps their car stalls going down the road-all of which could be dangerous, but by comparison to lifesaving drugs that constantly come over our borders-much of it from Mexico but some of it from Canada-through Internet and other purveyors that are a diluted or in fact are not what they claim to be, America cannot and the Congress should not consider anything that would increase an already dangerous tendency that's been growing on the Internet.

So in addition to the voices you will hear today, hopefully I'm here in front of you not just as a congressmen but as an inventor, as someone who is engaged in global free trade in my business to say that there are solutions that Congress should be working on. We should be working on tort reform. We should be looking at how we lower the cost of getting to market of innovative new products. But to simply swamp the Canadian market by saying we will leverage on your group buying knowing that it is-as it was previously said very accurately-a short-term solution that would not satisfy even the California market much less the vast market of the United States. Hopefully you'll take that with you in realizing that a true populist is more concerned about what's right for the people than what the people think they want before the truth is told. Thank you.

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