Screaming for relief

Here is a paradox of America's health-care system: the U.S. invents most of the world's great prescription drugs, but thousands of Americans cross into Canada and Mexico to buy them. Some go on their own; others ride buses in organized tours sponsored by senior-citizen advocacy groups. Either way, they want medications that salve ills from leukemia to ulcers, mood disorders to high cholesterol. These are the identical life-improving, death-defying drugs that they would get at home--but for a fraction of the cost. And so it is on a November day in Nuevo Laredo, Mexico, just over the bridge from Laredo, Texas. LOS PRECIOS MAS BAJOS GARANTIZADOS, declares the sign at Farmacia el Fenix: "The lowest prices guaranteed."

Nuevo Laredo is a prescription Mecca for many in the Southwest. That's what brought Marvin Bryan here. A feisty 73-year-old long-distance trucker and former reading teacher from Mesa, Ariz., he had heard about Nuevo Laredo's prescription-drug bonanza from his trucker pals. Clutching a plastic bag, he is pleased with his purchases, which include Augmentin, Proscar and that modern elixir, Viagra. Nearby, Bill Gibson picks up Tagamet, the stomach medication, for a mere $7.50--far less than the $62 he says he would pay back in Oklahoma City, Okla., "even though it's made by the same company as the stuff I get in the U.S."

While the high cost of drugs is making Americans cross the border, in Washington it's making politicians nervous. Last Friday Speaker of the House Dennis Hastert found his Illinois office besieged by 300 angry protesters wielding prescription-drug bottles. In Washington, Al Gore staged an event at a local pharmacy to denounce the cost of prescription drugs. In Chicago his Democratic opponent, former Senator Bill Bradley, told health-care professionals that he was committed to providing a Medicare benefit for drugs. And in New Hampshire, Republican Senator John McCain, who is moving up in the polls against front runner George W. Bush, expressed concern that some drug companies were using sneaky legislative maneuvers to extend their lucrative patents on pharmaceutical drugs--a move that would keep cheaper generic drugs from consumers. For their part, congressional Democrats held a pep rally last week to show they care about the problem. One speaker: senatorial wannabe Hillary Rodham Clinton.

That's partly because these Democrats are convinced that the issue may help them retake control of the House of Representatives. In fact, an internal poll for the Democratic Congressional Campaign Committee conducted by Geoff Garin shows 75% of Americans supporting the Bill Clinton idea of extending Medicare coverage to prescription drugs. Even a top G.O.P. election official concedes, "The issue is killing us."

That's not surprising. The cost of prescription drugs has soared in recent years. By one estimate, drug prices have risen about 12.2% annually since 1993, and this at a time when total health-care costs are rising at a more manageable 5.1% rate. The hikes are particularly rough on the elderly, who--not surprisingly--spend three times as much on drugs as the rest of the population. What's more, insurance coverage for prescription drugs is a big problem for many seniors. Medicare doesn't cover prescription drugs unless they are associated with a hospital stay. True, about two-thirds of the 39 million Medicare-covered seniors have some kind of prescription-drug insurance through either their former employer or one of the many so-called Medigap insurance plans. But these plans are often expensive and require high co-payments, so even those with some drug insurance coverage fret over their costs.

All of this comes at a time when the demand for drugs is growing. Pharmaceuticals companies are making what seem like almost daily breakthroughs on diseases like Alzheimer's, arthritis and mood disorders. The allure of all these new drugs makes their high cost that much more frustrating to those who want them. "The drugs aren't seen just as a cure for illness. They're seen as essential to an active, healthy lifestyle. That makes the issue even more salient," says pollster Garin.

There are competing ideas about how to cover the uninsured. Most congressional Democrats favor the Clinton plan, which would create a new Medicare benefit for prescription drugs, to be called Medicare Part D. For about $24 a month, those who choose the plan would have no deductible, but they would pay for half of their prescription drug costs, up to $5,000. Single seniors making $11,000 or less and senior couples making less than $17,000 would be spared the co-payment cost.

Congressional Republicans have yet to coalesce around a single plan, but most G.O.P. measures are likely to be built around a bipartisan Senate bill, sponsored by Democrat John Breaux and Republican Bill Frist. Just last week the pharmaceuticals lobby in Washington announced its tentative support for the Breaux-Frist approach, which would compel insurance companies to provide a "high-option" plan with drug benefits and then help cover the cost of that insurance for the poor and near poor. With its bipartisan cachet, the Breaux-Frist bill is likely to become the big starting point for a fiery debate, particularly since next year the Senate Finance Committee plans to take up comprehensive Medicare reform for the first time since the program was introduced in 1965. But even Breaux concedes his solution will have a difficult journey becoming law: many of his fellow Democrats will want to keep prescription drugs alive as an issue.

That's already evident on television, where an ad war over prescription drugs is under way. A pro-drug industry coalition with the cheery moniker Citizens for Better Medicare has inundated the Beltway's airwaves with ads depicting "Flo," an active senior made vibrant by her prescription drugs. The ads, produced by G.O.P. consultant Alex Castellanos, have Flo fretting about "Big Government in my medicine cabinet." The industry has also launched feel-good ads about itself, depicting, among other things, an aging cowboy who talks about how drugs saved his life and allowed him to spend time with his grandson. Subtext: leave the industry alone; it needs healthy profits to make more miracle pills.

This issue of drug-company profits will increasingly be on politicians' lips. The pharmaceuticals industry enjoys double-digit profits and argues that its ample returns are justified by the high cost of research. (Indeed, the drug manufacturers plow back far more into research and development than do most industries.) Drugs may be cheaper in other countries, the industry maintains, but that's only because those countries impose price controls that, if adopted in the U.S., would crush the industry. "It would stamp out innovation," maintains drug-industry spokeswoman Alixe Glen Mattingly.

The G.O.P. presidential candidates have yet to engage the issue of prescription drugs in great detail. McCain and Bush have made noises about extending coverage to more of the uninsured, but neither candidate has come up with a detailed plan. In the Democratic race, where prescription drugs could turn out to be a major issue, the Gore campaign has been rather specific. The Vice President has backed a series of proposals, including creating a Medicare benefit for prescription drugs and making it much harder for drug companies to get patent extensions that would delay the introduction of lower-cost generic drugs. Gore, for instance, would force an up or down vote on a patent extension rather than having it buried in other bills. "You want the case to be good enough that members of Congress could feel like they could vote for it by itself," says Gore's senior policy adviser, Elaine Kamarck.

Bradley's proposals have also been thorough. He would offer a Medicare drug benefit too, although those with catastrophic illnesses would fare better under his plan, while the average prescription-drug user might do better under the Vice President's. Bradley has made vague noises in support of generics but has said nothing about patent extensions. And his Senate record leaves him open to the Gore charge that he's an advocate for the drug industry, some of whose biggest members, such as Johnson & Johnson and Schering-Plough, are based in Bradley's New Jersey. When Gore was a Congressman in the early '80s, he fought patent extensions for drug companies at the same time that Bradley was in the Senate fighting for the rights of drug companies to keep their patents. So it's not surprising that Gore put out a TV ad last week in Iowa and New Hampshire vowing to stop "price gouging" and none too subtly reminding voters that as a Congressman, he fought for generics.

The problem with all the proposed solutions is that no one can be sure about their unintended consequences. A new Medicare entitlement on the order of the Clinton-Gore-Bradley model could become a cost nightmare as boomers age and drug companies continue to crank out much coveted new drugs. But there's no guarantee that the alternatives would have enough money behind them to really cover the millions of Americans who are hurting from high drug costs. Meanwhile no one wants to see the pharmaceuticals industry, which has been full of inventions during the past decades, be stifled by government meddling.

And of course the work of policymakers could well be sidetracked by the spread of the Internet, which has already begun to turn the world into a global pharmacy. Hundreds of sites are springing up on the Net, housed abroad and not easily scrutinized by regulatory agencies. For the moment, such sites are still cumbersome to use. But there is the risk that in the future, it may not matter how finely tuned Medicare policy is if, say, Mauritania can sell prescription drugs at a fraction of their cost in the U.S. Meanwhile, Americans with prescriptions in hand continue to cross the border each day in an ironic twist on the American Dream: leaving the U.S. in pursuit of happiness--or at least cheaper vials of Viagra.

Screaming for relief

The high cost of prescriptions may be the hot issue in this election. What you should know about the problem, and why the pols are worrying

By Matthew Cooper

--With reporting by John F. Dickerson/Washington and S.C. Gwynne/Nuevo Laredo

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Cover Date: November 22, 1999