California Capitolweek

 

October 20, 2000

 

Prescription drug coverage

 

((Jack))  Just ahead . . . the real stories behind expensive prescription drugs. Staying healthy is not cheap these days . . .what are the real life implications? Plus . . . finding affordable medicine is a problem that affects all ages and income levels. Thanks for joining us, I’m Jack Kavanagh . . . . Melissa Crowley is on location.

 

This is the first of two specials on health . . . . part of a multi- media, election project called health counts 2000.  We’ll tell you more about the partners and project later. Right now, let’s put this week’s issue on the table.

 

People in the united states enjoy the best health care in the world, but it comes at a high price . . .   and drugs are the fastest growing piece of the bill Especially for seniors covered by Medicare, which has no prescription benefit. There are clear differences in how Al Gore and George Bush would address the problem, and it could swing the election. A survey by the California HealthCare Foundation and the Field poll  . . . .shows 45 percent of un-decided voters in California rank medicare among their most important issues. We’ll lay out the candidates’ plans later, but let’s hear from our in studio experts.

 

DISCUSSION PT. 1

 

((Jack)) Alixe Mattingly represents the pharmaceutical industry.  Alixe, you know what the problem is, and obviously the pharmaceutical industry is in the middle of it.  Is there a solution out there somewhere? How do we fix this?

 

((Alixe Mattingly, Pharmaceutical Industry Representative)) Well, we feel that the solution lies in insurance coverage for all seniors.  First, let me say that anytime a senior cannot afford their medication, it’s obviously a concern to us and a concern, I would think, to society.  Obviously, this election year has shown that it’s an absolutely pivotal issue, but 150 million Americans who do have health coverage also have prescription drug coverage, just like those of us at this table, members of congress, and most of the employed people in this country.  They have insurance coverage that allows them a very small co-pay, five or ten dollars, and they’re getting access to the most innovative and greatest medicines that are on the market today.

 

((Jack)) All right.  Don Fielding from the AARP how to we get out of this problem?  How do we fix this?

 

((Don Fielding, AARP)) Uh, I think that Alixe’s comment about an insurance program needs to be examined.  I think that AARP—I know that what AARP advocates is that prescription drug benefits be included in Medicare, that they be affordable, that they be available to all, and I think that if we rely entirely on insurance programs, first we have to determine that insurance companies actually want this assignment, and we find that HMOs, who are actually insurance companies, are actually pulling away from the senior market at this point because they think that there is inadequate reimbursement.

 

((Jack)) All right.  Patricia Yeager from the California Foundation for Independent Living, how do we fix this problem?  How do we get around this problem?

 

((Patricia Yeager, CA Foundation for Independent Living)) Well, representing people with disabilities who often can’t get insurance because of a preexisting condition, catastrophic paralysis, those kinds of things, I think we have to go for universal health care.  Insurance companies that can say, “No, we don’t want to take the sickest or people with chronic health conditions” because they cost too much, get left out in the cold from the traditional insurance providers, so people with disabilities can’t go back to work if they lose their healthcare, including medicine.

 

((Jack)) Mark Smith from the California HealthCare Foundation, what is the view from your side?  How do we fix this?

 

((Dr. Mark Smith, CA HealthCare Foundation)) Well, I think in the long run, we’re going to have to strike a balance between allowing pharmaceutical companies the profits that stimulate research and innovation, and our growing inability to pay the bill.  Whether it’s insurance or universal healthcare, that simply means that someone is paying the bill at the back end.  In the end, someone has to pay that bill, and increasingly government and employers are looking for patients to pick up a greater and greater portion of the cost because the costs have been rising so rapidly.

 

 

END DISCUSSION PT. 1

 

(( Jack )) We’ll have more from all of you in a moment. But first . .  a personal look

at the two sides that have the most at stake. Michael Isip has this report from San Diego

 

END Report

 

DISCUSSION PT. 2

 

((Jack)) Alixe, what do you say to those people?

 

((Alixe Mattingly, Pharmaceutical Industry Representative)) Well, I think, as Mr. Roth said in your taped piece, just like the cost of a textbook is not just the sum of the pages it’s printed on, the discovery and process of new and innovative drugs is extremely time consuming and very risky, and it doesn’t come cheap.

 

((Jack)) Would those same drugs, though, that those people were taking in San Diego be cheaper if they crossed the border and bought them in Mexico?

 

((Alixe Mattingly, Pharmaceutical Industry Representative)) They may.

 

((Jack)) And why are they cheaper there than here?

 

((Alixe Mattingly, Pharmaceutical Industry Representative)) Well, the very simple answer is because they have price controls in Mexico.  However, I don’t think that price controls is [sic] the answer in America.  What they also have with the price controls in Mexico is very limited access to innovative drugs.  Here in America, we have become accustomed to loving and appreciating the greatest health care system in the world.  That would change if we had a scenario in which we had price controls.  I mean, I do want to reiterate, though, because of the time and expense in creating these drugs that are absolutely lifesaving, life-enhancing, improving the quality of people’s lives—

 

((Jack)) Well, let me take the question to Patricia.  Without those drugs, there are many people as we just saw, who would not be alive right now, so there’s no choice there, and is price controls the only solution to this problem, or does that cut off the supply of potential drugs that could save more lives?

 

((Patricia Yeager, CA Foundation of Independent Living)) Well, I’m not an economist, and I don’t have a perspective on that particular issue, but it seems to me that your market is going to die if you don’t medicate it, and aren’t able to keep it going.  I think that there’s going to have to be some governmental intervention here that allows people to pay for or to get the drugs they need, and maybe it means saying, “Let’s have an agreement about the cost of development is shared with the developer and the government and the consumers paying a part of it as well.”

 

 

((Jack)) Mark, is that a viable option to spread the risk around?

 

((Dr. Mark Smith, CA HealthCare Foundation)) Well, I think that there are some models.  With my volunteer hat on, I’m an HIV doctor, and I’ve taken care of people with AIDS for many years, and the world of AIDS is a very good example of people who literally would not be alive today were it not for drugs that have come about as a result of a very expensive process.  Two things need to be said: first, there are programs that have been developed to help pay for the drugs for people who either don’t have the insurance or who are not poor enough to qualify for one of the government insurance programs generally.  It’s called the AIDS Drugs Assistance Program, so there are some ways of trying to fill some of the gaps in the private insurance market to help people pay for drugs.  The second thing, though, that I think we need to realize is that in AIDS, as in so many other areas, the private investments that drug companies make, which they do need to recover, have been accompanied by huge public investments in the research infrastructure early—often in the early days of discovering these drugs, and so unlike some other areas, there really is a substantial public involvement and public investment in the scientific pipeline for developing these drugs in the first place.

 

((Jack)) Don, is this making sense to you at all?

 

((Don Fielding, AARP)) Yes it is, and I would like to mention with respect to the high cost of drugs.  Figures that have been accepted by most indicate that when one looks at the total budget of pharmaceuticals, that thirty percent now of the companies’ budgets to promotion, to public sales advertising, and we see these in The New York Times and The LA Times, and on television.  Well, there is still an eighteen percent profit margin.  Twenty-percent of the budget goes into research and development.  I’m questioning whether or not it makes sense to spend twenty percent of a pharmaceutical company’s budget on promoting a drug.

 

((Jack)) Al Gore made that point in the last debate.  He said that pharmaceutical companies are spending more on promotion and advertising than they are on research.  Is that, in fact, true?

 

((Alixe Mattingly, Pharmaceutical Industry Representative)) No, in fact, it’s not.  The industry this year will spend twenty-six billion dollars.  That’s what they will spend on research and development of new medicines.  They spend less than seven on overall education and marketing costs, and most of that seven is spent on educating doctors on how to administer these new and innovative drugs to their patients, so that’s really very much a faulty number that keeps getting thrown out there.

 

((Don Fielding, AARP)) I think you and I have different data because we have seen over and over again that the amount of money spent for promotion exceeds that for development and research.

 

((Jack)) Mark, can you chime in on this?  Who is right?

 

((Dr. Mark Smith, CA HealthCare Foundation)) With all due respect to the Vice President, there was a study by the Kaiser Family Foundation that, I think, shows pretty clearly that he’s simply wrong on that.  There is substantially more money spent on development and research, and, you know, frankly, I think that one could argue about whether or not money spent on promotion is wasted.  If you have breast cancer, you’re trying to stop smoking, or you have asthma, if you don’t know about these new drugs, you won’t be able to take advantage of them.  The problem has to do, I think, with our having to reconcile the fact that these drugs are increasingly essential for people’s lives, and yet, the fact that they are so expensive means that there are growing numbers of people that simply cannot afford them if they have to pay for them out of their own pocket.

 

END DISCUSSION PT. 2

 

(( Jack )) We’ll pick up this discussion in a moment. Now  . . .this issue of prescription drug coverage impacts people of all ages. Melissa Crowley went to Southern California for that side of story.

 

END DIVERSITY OF UNINSURED Report.

 

DISCUSSION PT. 3

 

((Jack)) Patricia, you had mentioned earlier that you represent people with disabilities, and I would imagine that from that group, they could see what we just saw and say, “been there, done that.”

 

((Patricia Yeager, CA Foundation for Independent Living)) Right.

 

((Jack)) Now, what are the coping skills, what are the tricks of the trade that the disabled community can now show us in the able-bodied community who are facing the same problem?

 

((Patricia Yeager, CA Foundation for Independent Living)) Well, I don’t know that there are too many tricks of the trade.  I think that many people in San Diego do go across the border, and they organize caravans.  One person goes down and picks up drugs for a whole group of people, buying online, and a great number of people don’t go to work because they can stay on Medical and get drugs from the Medical provider.

 

((Jack)) Mark, one of the most fascinating things that I saw in that California Healthcare Foundation field poll was that eighty-six percent of people that belong to a health plan have some sort of drug coverage, so there seems to be a safety net there, but the stories that we’re hearing indicate that maybe that safety net is not strong enough.  What’s going on?

 

((Dr. Mark Smith, CA HealthCare Foundation)) Well, I think people are concerned, first, because they know that prices are rising.  In many plans, including Medicare plans, the co-pays for drugs are going up, and I think that you’ll increasingly see employers use what’s called “tiered” pharmacy benefits.  In other words, they’ll say, “if you’re going to get this kind of drug, your co-pay is five dollars.  If you’re going to get that kind of drug, your co-pay is fifteen dollars.  If you’re going to get Viagra or perhaps some other kind of drug, you co-pay is going to be fifty dollars.  I think that’s one of the strategies that employers and other purchasers will begin to use because no one wants to be left holding the bag for increased drug pricing.

 

((Jack)) And, Don, what happens to members of the AARP in a situation like that?

 

((Don Fielding, AARP)) Well, as Trish mentioned, there are caravans that go to both Canada and Mexico.  Approximately a third of Medicare beneficiaries have absolutely no drug coverage.  They don’t have supplemental insurance because they can’t afford the premiums, and so it’s out of pocket, and twenty-five percent of Medicare beneficiaries rely on their social security benefits for their total income, so in many cases, it’s a choice between food, utilities.  Some seniors take half the medication prescribed; they take every other dose.

 

((Jack)) That’s pretty common, isn’t it?

 

((Don Fielding, AARP)) And it’s a problem that really cries out for resolution.

 

((Alixe Mattingly, Pharmaceutical Industry Representative)) You know, Jack, if I can correct somewhat of a misnomer, it is less that the price of drugs is going up—in fact, that is staying below cost of living increases—it’s that utilization is quickly on the rise, and I think it’s because most people know the advances and the scientific innovations are bringing us such incredibly powerful medicines that are bringing down healthcare costs in other sectors.  I mean, you can take a pill and stay off the surgery table, stay out the hospital, stay out of long term care—

 

((Jack)) And that’s where medicine is going right now?

 

((Alixe Mattingly, Pharmaceutical Industry Representative)) Far more invasive procedures, far more costly that also keep you out of your job, out of your home, away from your kids, and whatever it is that you’re trying to enjoy your way of quality of life.  I think that our society—

 

((Jack)) Don, go for it.

 

((Don Fielding, AARP)) All right, Alixe, I think you’re right in terms of drugs.  For instance, when Medicare was first developed in 1965, there we significantly fewer drugs available.  Now drugs have replaced surgery.  They’ve replaced other treatments that were fare more expensive, but let’s face it, the inflation rate for pharmaceuticals is twice that for all other medical procedures.  The inflation rate is extremely high.  The use of pharmaceuticals is extremely high, and I think we ought to recognize this new reality.

 

((Alixe Mattingly, Pharmaceutical Industry Representative)) Which is something that I think we ought to celebrate.  Our nation needs policies that invest in the future of these innovative drugs.  As Mark said, AIDS patients are alive today because of the discovery of these medicines.  Diabetics can lead normal lives, someone with Parkinson’s can lead an absolutely active life, a child with asthma can play sports with his friend--

 

(( Jack )) All right, this is a good time to take a quick look at the basic differences between the Bush and gore plans. Al Gore proposes a drug benefit under the traditional medicare program.

Bush’s criticism is that it expands the role of the federal government. For his part, George Bush would overhaul medicare . .  .providing taxpayer subsidies, so people can shop around for coverage. Gore’s criticism is that it would leave out millions of middle class seniors.

 

Some final thoughts, and, Mark, let’s start with you.  I get a sense in this discussion that there’s going to be a compromise somewhere, a little bit that each group doesn’t like, but it’s something that we need to do in order to keep medicines in the hands of the people who need them?

 

((Dr. Mark Smith, CA HealthCare Foundation)) Well, I think that’s right, and I think in the long run that’s what will be necessary.  Our healthcare system seems to work by fits and starts, and I think in AIDS there may be some models for how some of these things can be covered.  In California, there is a high risk pool that people can apply for if they have a chronic disease and wouldn’t otherwise be able to get insurance coverage, but I think it’s notable that in our survey, sixty-six percent of Californians supported the idea of price controls for drugs, so if pharmaceutical companies are concerned that price controls would stem the tide of new research, they need to be part of the solution to this problem because they’re coming if it doesn’t get solved.

 

((Jack)) Alixe, I need to give you the last word on that because it sounds like there is some sort of price control out there that should be anticipated.

 

((Alixe Mattingly, Pharmaceutical Industry Representative)) Well, unfortunately, price controls have consequences.  They’ve been tried for thousands of years around the world, and they do not work.  They make quality go down, and, I think, ultimately make access go down, and I don’t think that we want government bureaucrats deciding what medicines we take and what price we are going to pay for them.  We need to let the marketplace, I think, determine the outcome of this.  However, I think that the debate that has gone on this year at the political level, while sometimes it has been very demagogic and rhetorical, is going to mean action in Washington when they all get back in January.

 

END DISCUSSION PT. 3

 

 

((Jack)) And that is the last word for this conversation.  We thank you all very much for being here. We mentioned earlier that this program is part of a project called health counts 2000. Our partners have generated material that we want you to have before November 7^th.

 

With the help of research from the California HealthCare foundation . . . the Sacramento Bee devoted this recent Sunday section to health.  And the California Journal published this supplement outlining candidate positions on health. You can get these materials two ways.  First log on to the partner website.  The address is: health counts 2000 dot o-r-g Or call this toll free number 1-888-430-chcf. Again . .  .  888-430-chcf

Now, here’s what’s on tap for part 2 of this series.

 

 

The Uninsured, they balance their health with their pocketbook.  It affects one in five Californians, many of them children, and it’s an issue with little attention, but seventy-two percent of voters say that healthcare for children, regardless of their ability to pay, is their top priority. 

 

Using interactive technology, we’ll take you to clinics in Fresno and Los Angeles, so that you can hear their stories, part of interactive effort to help you make decisions this election.  Health Counts 2000, you can’t afford to sit this one out.

 

(( Jack ))

That is our program for this week, Melissa Crowley will be back next week.  Until then, I’m Jack Kavanagh.  See you next time.