Medicare Law Puts Rx In Spotlight Of Presidential Campaign Politics

Restrictions on direct-to-consumer advertising of prescription drugs are among health care proposals being offered by 2004 Democratic presidential candidates.

Former Vermont Gov. Howard Dean and Sens. Joe Lieberman (Conn.) and John Edwards (N.C.) include planks on DTC regulations in their health care platforms.

Dean has the most aggressive position, calling for an outright ban on most DTC ads. "I support a ban on direct advertising of prescription drugs to consumers...except for situations where there is a compelling public health justification for the advertising," Dean says in his ¹ prescription drug plan.

Dean's view on DTC reflects both a general Democratic theme of attacks on pharmaceutical industry pricing practices and his background as a physician. DTC advertising remains troubling to many physicians.

Edwards vows to "crack down on ads that are misleading or overpromise," according to his position statement on ² health care cost reduction. Edwards authored an unsuccessful amendment to the Medicare drug benefit legislation to stop "wasteful and misleading" DTC ads (³ (Also see "Senate Medicare Bill Directs GAO To Study International Price Controls" - Pink Sheet, 7 Jul, 2003.), p. 16).

Lieberman would "ensure all drug advertising is fair and accurate," according to his ⁴ prescription drug platform.

The potential for DTC advertising to re-emerge as a political issue is one of the ways that the 2004 Presidential campaign may be difficult for the brand name industry.

Even more so, the Medicare drug benefit legislation signed into law by President Bush in December is certain to be an important element in the 2004 campaign. The Democratic candidates agree that the law does not do enough to control drug prices.

The Presidential election campaign is likely to put brand name drug companies squarely in the spotlight of Democratic attacks. However, there are differences among the potential Democratic nominees that could significantly determine how difficult the campaign season will be for the industry's image.

All of the candidates have criticized the Medicare bill. Rep. Dennis Kucinich (Ohio) and Sen. Edwards voted against the bill. Sens. John Kerry (Mass.) and Lieberman did not vote on final passage of the bill, but did vote for procedural motions aimed at blocking it (⁵ (Also see "Medicare Rx Discount Cards Will Appear By June As Bill Clears Final Hurdles" - Pink Sheet, 1 Dec, 2003.), p. 21).

Dean dismissed the Medicare bill as "an election-year gimmick."

"This is the quintessential special interest bill," Dean declared. "Drug company profits will rise 38% as a result of this bill."

The Democratic contenders' theme that the bill is a gift to the brand name pharmaceutical industry is likely to be underscored regardless of who claims the nomination.

The brand name industry can be expected to line up behind President Bush in the general election.

As a physician and former governor, Dean has the most hands-on experience of any of the candidates in managing the use and cost of pharmaceuticals.

His prescription drug plan reflects that background. Like all the Democratic candidates, he supports reimportation and opposes "abuse" of the Waxman/Hatch process.

However, in addition to calling for a ban on DTC ads, Dean highlights the importance of health care payers preferred drug lists and flexibility for states in managing drug costs.

The brand name industry generally opposes PDLs and has tried to use federal oversight mechanisms to limit experimentation by states.

Dean also supports a federal law requiring disclosure of gifts to physicians. During his tenure as governor, Vermont enacted such a law.

Sen. Joe Lieberman appears to be the clear favorite among brand name companies in the Democratic field. According to campaign contribution reports through Nov. 3, Lieberman received over $60,000 from manufacturers.

By comparison, though, President Bush had received more than $240,000 in reportable contributions from drug manufacturers.

In the Senate, Lieberman has been an advocate for intellectual property protection and other government support for biomedical research. Pfizer has a large R&D presence in Connecticut, and there are a number of smaller biotech firms in the state.

One of the primary components of Lieberman's health care plan is an "American Center for Cures" to help translate basic research into medical applications. The center would work with small biotechs and academia to support the most promising leads and research toward chronic disease cures.

One goal is "bringing down bureaucratic barriers faced by small companies to drug development, testing, and approval - including the cumbersome patent process and the long wait for clinical trials," according to an outline of the ⁶ ACC plan.

Funding for the proposed center, estimated at $150 bil. over 10 years, would come mainly from the private sector via cost-sharing mechanisms, combined with a "small percentage" of new drug royalties.

Sen. Kerry also hails from a state with a large biotech and pharma R&D presence.

For generic drug companies, the Democratic field looks much more attractive. Each of the candidates supports efforts to prevent "abuses" of the Waxman/Hatch process by brand name companies.

Edwards has the highest profile record of supporting generic drug issues. He embraced the McCain/Schumer generic drug legislation in 2002. Although the stand-alone reform effort failed, the Medicare law incorporated many elements of the plan (⁷ (Also see "Waxman/Hatch Reform Bill Needed Despite FDA’s Rule – McCain, Schumer" - Pink Sheet, 31 Mar, 2003.), p. 10).

On the campaign trail, Edwards says he will establish "an expert commission, not controlled by the industry, to recommend appropriate changes to existing patent laws" to address "me-too" drugs.

The former trial lawyer would tackle drug prices by requiring the Justice Department to "investigate drug companies that overcharge the government. I will take away antitrust and other special exemptions that allow price gouging by the insurance industry."

Edwards has also been an advocate for an expanded federal role in cost-effectiveness research and has indicated support for a superiority standard in the drug approval process.

Another Democratic candidate, Gen. Wesley Clark, supports increased funding for comparative research. He would establish an independent commission to provide "comparative information about therapeutic interventions" including "pharmaceuticals in the same class," according to his ⁸ health care plan.

The commission would work with the Agency for Healthcare Research and Quality, the National Institutes of Health and "international counterparts" such as the UK National Institute for Clinical Excellence and the Canadian Task Force on the Periodic Health Examination.

The issue of cross-border pricing is certain to feature in the 2004 campaign. "Our citizens should be permitted to realize the substantial savings of purchasing drugs by mail order from Canadian pharmacies," Dean maintains.

"In contrast to the Bush Administration, which has been cracking down on Canadian drug importers, I would direct the FDA to facilitate this proven strategy," he declared.

Rep. Kucinich would address U.S. drug prices more directly. "Our government should place limits on the price that any manufacturer can charge for prescription drugs," he maintains in his prescription drugs platform.

"We need a new prescription for America, a regulatory structure which puts a ceiling on drug company profits the same way credit laws establish what constitutes usury," Kucinich asserts. "As with utility rates, our government should be empowered to lower prices and impose windfall profits taxes to correct excess pricing."