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Drugmakers Stave Off Cheaper Imports With Senate Vote (Update1)

Dec. 15 (Bloomberg) — Drugmakers such as Eli Lilly & Co. staved off a possible influx of cheaper medicines from Canada and other nations after the U.S. Senate voted against loosening importation rules as part of larger health-care legislation.

The Senate rejected the amendment by a 51-48 vote, with 60 needed for approval, turning back a measure sponsored by a bipartisan group of lawmakers led by North Dakota Democrat Byron Dorgan and Maine Republican Olympia Snowe.

Proponents said the plan would have allowed pharmacies, wholesalers and consumers to buy medicines made by U.S. companies sold at lower cost in other nations. Drugmakers, who have to contend with foreign health systems that regulate prices, said they need the open market in the U.S. to thrive and warned of safety risks from counterfeiting.

“It would be a huge mistake for Congress to pursue policies that could expose Americans to counterfeit and substandard drug products,” said Ken Johnson, senior vice president of the Pharmaceutical Research and Manufacturers of America, a Washington industry group.

Dorgan’s amendment threatened a truce Democrats struck with the industry, which has so far supported the overhaul effort. Drugmakers agreed in June to contribute $80 billion over 10 years, largely to help seniors afford medicines, in return for heading off other profit-endangering proposals.

‘Painfully Simple’

“This is painfully simple, whether the American people should be charged the highest prices in the world for drugs,” Dorgan said on the Senate floor before the vote. “The American people ought to have the freedom to shop for lower-price drugs.”

Dorgan, who said his bill would save $100 billion over 10 years, has decried a 9 percent increase in drug prices this year, saying Americans pay 33 percent to 55 percent more for the same drugs that Europeans and Canadians buy.

He criticized a similar amendment backed by senators from drug-making states such as New Jersey as a poison pill because it would only allow the importation of drugs if the health secretary certified they were safe and lowered costs.

The amendment was sponsored by senators Frank Lautenberg and Robert Menendez, both New Jersey Democrats, and Democratic Senator Thomas Carper of Delaware who blocked a vote on Dorgan’s amendment on Dec. 10.

Protecting the People

Lautenberg, whose state is home to drugmakers such as Johnson & Johnson and Bristol Myers Squibb, rebutted critics who say “the principle purpose of our amendment is to protect the profit of the drug companies.”

“No,” Lautenberg said on the Senate floor. “I want to protect the health of the American people.” His amendment also was defeated 56-43, with 60 votes needed for approval.

Drugmakers including Indianapolis-based Lilly got support for their position from the Food and Drug Administration. In a Dec. 8 letter, FDA Commissioner Margaret Hamburg said there are “significant safety issues related to confusion in distribution and labeling” of foreign and domestic drugs that aren’t addressed in the plan.

While President Barack Obama supported importation in the past, the timing of the letter suggested a change in position, said Arizona Senator John McCain, the Republicans’ 2008 presidential nominee and a co-sponsor of the amendment.

“A lot of it has to do with the deals that have been made,” McCain said during debate on the plan last week.

White House Position

Obama was a co-sponsor of a Dorgan importation bill when he was still in the Senate. White House spokesman Robert Gibbs said on Dec. 8 that the president is still supportive of the idea as long as safety concerns can be addressed.

Dorgan’s amendment was co-sponsored by 11 Democrats and four Republicans, including Senator David Vitter of Louisiana and Senator Charles Grassley of Iowa.

Senator Mark Begich, an Alaska Democrat who also sponsored the bill, said it would provide “savings to the taxpayer and savings to the consumer.”

Dorgan put those savings at $100 billion in 10 years, “nearly $20 billion for the federal government and nearly $80 billion for the American people.”

U.S. drugmakers have long fought attempts to allow the so- called reimportation of medicines from nations where price controls keep costs low. Americans spend more than $200 billion on prescription drugs every year, according to the amendment.

Insurance Mandates

The broader Senate legislation is designed to cover 31 million uninsured Americans and curb rising medical expenses. At a cost of $848 billion over 10 years, the bill would make the most sweeping changes to U.S. health care since the 1965 creation of the Medicare program for the elderly.

Like a measure passed Nov. 7 by the U.S. House, the Senate plan would require all Americans to get health coverage or pay a penalty. It would expand the Medicaid health program for the poor, set up online insurance-purchasing exchanges and provide subsidies for those who need help buying policies.

Republicans say the legislation, Obama’s top domestic priority, might crowd out private insurers and some providers, raise taxes and explode federal budget deficits.

[bloomberg Post]

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