Sam Uretsky

Why Not Free Trade for Drugs?

Sen. Byron Dorgan (D-N.D.) is trying to upset the apple cart. Relatively early in the discussions on how to save money on health care, the pharmaceutical manufacturers offered discounts to people in Medicare part D who had fallen into the donut hole. The donut hole was a gimmick devised to make Medicare part D fit a budget allocation, in pretty much the same way the Bush tax cuts are scheduled to expire at the end of 2010. In the 2009 figures, for those people who have part D, the first $295 in prescription drug costs are out-of-pocket. Then, from $295 to $2,700, Medicare picks up 75% of the cost. Once costs have reached $2,700, Medicare goes away again, and doesn’t come back until $6,154. For drug expenses after $6,154, Medicare covers 95%. The $295 to $2,700 spread is called the donut hole, an accounting trick that is played on elderly patients with limited incomes. On June 22, President Obama said “... this gap in coverage has placing a crushing burden on many older Americans who live on fixed incomes and can’t afford thousands of dollars in out-of-pocket expenses. ...” The White House press release added: “The gap in coverage drives many seniors to resort to the potentially life-threatening option of taking only half of their medication thus reducing the drugs‚ effectiveness.”

The Pharmaceutical Research and Manufacturers of America (PhaRMA) responded with a promise to sell drugs to Medicare at a 50% discount, which they claimed would save $80 billion over 10 years — but when the people favoring a public option started talking about having Medicare negotiate prices directly, and not rely on the generosity of PhaRMA, the organization made it clear that the discount was their final offer. Now, Sen. Dorgan has raised the notion of legalizing the reimportation of drugs from Canada and other nations. This is an idea that was popular a few years ago, but has been quiet since then. The idea is that since some drugs are sold at lower prices in other nations, notably Canada, we should let people buy the drugs from Canadian pharmacies. Minnesota, on its web site, after giving the required warnings, offers a list of Canadian pharmacies that seem trustworthy. Utah takes a different approach: “... Utah businesses that facilitate Utah consumers to obtain prescription drugs from Canadian pharmacies are unlawful and violate both state and federal law.” The one thing that’s clear is that buying drugs in Canada is less expensive than buying them in the US. Considering the potential savings, it’s surprising that nobody has offered Detroit as a good place for retirees. (The Detroit housing market is so depressed that it’s heating up. Recent listing had houses going for as little at 10% of their pre-recession prices, and overseas buyers are coming in.)

Another proposal has come from Sen. Bill Nelson (D-Fla.) who suggested that double eligibles, people who qualify for both Medicare (old) and Medicaid (poor) should be shifted to Medicaid. Medicaid pays less for drugs than does Medicare, and the anticipated savings would be $106 billion. According to Sen. Nelson, half the savings could be used to close the donut hole, and the other $53 billion would be a direct savings. Sen. Nelson noted that the drug companies have been so busy raising prices that the $80 billion discount will only cost them about $20 billion. AARP has endorsed Sen. Nelson’s proposal, and threatened to oppose the Senate bill unless Sen. Nelson’s proposal is adopted. AARP’s approval is vital, since the Republicans have been focusing on proposed cuts in Medicare spending as being harmful to seniors and an AARP endorsement helps answer the claims.

But through it all, perhaps the clearest voice has been that of Rep. Dennis Kucinich (D-Ohio) who said “... We have been led to believe that we must make our health care choices only within the current structure of a predatory, for-profit insurance system which makes money not providing health care. We cannot fault the insurance companies for being what they are. But we can fault legislation in which the government incentivizes the perpetuation, indeed the strengthening, of the for-profit health insurance industry, the very source of the problem ...”

What seems frustrating is that there’s a world of experience showing us how to run a high quality, low cost health system. Australia even calls its system “Medicare” so it should be easy to understand, and Canada is in walking distance if we want to see how it works. The question seems to be, do we want a good, low-cost health system, or a bunch of happy corporations? We should have answered that before anybody started drafting a bill.

Sam Uretsky is a writer and pharmacist living on Long Island, N.Y.

From The Progressive Populist, January 1-15, 2010

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