Rx DRUG COSTS II: Industry Has ‘Unseen’ Influence

      In the national debate over prescription drug prices, the pharmaceutical industry has a "broad and sometimes unseen reach" that has so far helped it "stav[e] off what it fears the most: a government-run prescription drug plan for the elderly," the New York Times reports. The industry has "worked hard over the past 15 years to cultivate alliances" with a variety of provider, business and consumer groups -- relationships that have allowed drug companies to influence the debate in ways that are "not always readily apparent." Last spring, for example, the Pharmaceutical Research and Manufacturers of America "heavily advertised" a study by the Lewin Group consulting firm that found offering prescription drug coverage through private insurance plans could provide discounts of 30%-39%, a finding that "came in handy for Republicans when ... they passed an industry-backed bill" to provide a Medicare drug benefit through private insurers backed by government subsidies. But the New York Times reports that PhRMA never mentioned it had paid for the study -- and when the newspaper asked the researcher, Katharine Harrington, for additional analysis, "she lowered her estimates for potential savings to 23% to 33% for brand name and generic drugs and to 20% to 30% for brand name drugs only." A second study, presented to the Senate at a July 18 hearing, found that drug prices varied an average of 101% between pharmacies, implying that "[d]rug stores, not drug makers, are to blame for the high cost of prescription medicines." The Times reports that the study was sponsored by Citizens for the Right to Know, a consumer coalition backed in part by unnamed "drug and biotech companies," and that the 101% variation was "based on extremely high prices from one pharmacy." The pharmacy owner later said the figures were incorrect and presented lower figures that dropped the actual variation to 59%. At the same July 18 Senate hearing, Dr. Stanley Wallack, executive director of Brandeis University's health policy institute, "complained" about the difficulty of finding "independent" research on drug pricing. "Almost all the studies are being conducted by the pharmaceutical companies," he said.

Building Allies
      The pharmaceutical industry's push for allies began after 1984, when Congress passed a bill to promote generic drugs; before that, the Times reports, drug companies "worried little about the image of their industry." The "ally development" plan involved befriending groups representing patients, doctors, minorities and businesses. "As you get further from people who are hired to say things, you have a much more believable spokesman," PhRMA consultant Robert Allnutt said. The effort led to the creation of such "seemingly independent" groups as Citizens for Better Medicare, which has been "waging a $50 million advertising war against a government-controlled prescription drug benefit," and Alliance for Better Medicare, a self-described "coalition of nearly 30 organizations representing seniors, patients, medical researchers and innovators, doctors, hospitals, small businesses and others." Organizations that are members of such coalitions "say concern for the future of pharmaceutical research, and not money, drives their alliance with the pharmaceutical industry." The Times adds that the research argument -- the position that price controls on U.S. drugs will impede new pharmaceutical innovations -- "resonates strongly on Capitol Hill." Nevertheless, the Times reports, drug companies today "need allies more than ever," as the industry is "suffering some defeats" after a "decade of legislative successes, including tax breaks, speedier approval of drugs and patent extensions." The industry's need for allies is "perhaps nowhere ... as strong as in the states along the Canadian border," such as Maine, which recently passed a prescription drug-pricing law that allows the state to negotiate lower prices on drugs for the uninsured and ultimately to impose price controls if negotiations are unsuccessful. While the industry has responded with a lawsuit and has stopped making contributions to Maine Democrats, such as bill sponsor state Sen. Chellie Pingree, pharmaceutical lobbyists say that they are "outmanned" in the state, where "labor unions promote bus trips to Canada and where there are no drug manufacturing sites" (Gerth/Stolberg, New York Times, 10/5).