Drug industry could use a pill to make this campaign go away

By Calvin Woodward, Associated Press, 10/02/00

WASHINGTON -- For at least a decade, prescription drug costs have risen like temperatures on a fever chart, helping to make the industry profitable, innovative and -- when politicians have taken notice -- vilified.

Democrat Al Gore was first out of the gate in this presidential campaign in tapping the anxiety of voters squeezed by drug costs -- up by some 15 percent a year for the nation in the last few years. Now Republican rival George W. Bush is on the case, too.

But in a campaign with no room for shades of gray, some reasons for the expense -- such as developing the pills that have brought huge strides in healing -- are often brushed aside.

"All of that's complicated," Gore says. "The underlying fact is these drug prices have been zooming up and people don't have the means to pay for their medicine."

Those who blame higher costs on profiteering point to such developments as a more than 20-fold increase in TV drug advertising over the past six years, to $1.1 billion last year, stoking demand for select expensive drugs. Revised federal rules allow more TV drug ads than before.

Those who defend the industry point to its massive research investments -- $21 billion in 1998 -- and the fact that four of five experimental drugs fail. They note the health-giving benefits being wrought by the genetic and biotechnological revolution -- at great cost in new factories and new processes.

Cost increases are well above inflation and above the spikes President Clinton noticed in his 1992 presidential campaign before attacking the "shocking prices" for drugs and proposing a Medicare drug plan as president.

Much has changed since then:

-Rising drug costs now are due much more to the development of new drugs than to higher prices for particular prescriptions. A Brandeis University study found almost no price inflation for existing drugs over the past four years.

-With an increasingly elderly population, more people are being treated with drugs, and people who use prescriptions are taking more.

-Drug company profits remain high -- nearly four times the corporate average as a percentage of revenues.

-Health insurance is picking up a much greater share of the cost, helping to mask price increases for the average consumer but putting great pressure on the system nonetheless.

In 1990, according to the Kaiser Family Foundation and Employee Benefit Research Institute, people paid half of their drug costs out of their own pockets. Now they are paying less than a third of the costs themselves.

While the industry is turning out drugs that some see as modern miracles, they can cost a fortune. Rheumatoid arthritis sufferers who are not helped by the usual drugs, for example, can get relief from one called Enbrel.

But it debuted last year with a price tag of $12,000 for a year's treatment.

Pills now control a range of ailments that until recent years could not be treated without going under the knife. Medicine has eclipsed surgery as a treatment for ulcers.

From 1990 forward, the increased spending on drugs has far outpaced the increase for hospital care and physician services.

Americans were pinched by prices in the 1996 presidential campaign, too, when national drug spending went up 13 percent. But that was barely remarked upon at the time. Gun-shy after the failure of his health plan, Clinton did not push for a major expansion of medical coverage and both parties were caught up in deficit control.

With surpluses now replacing deficits, the push is on again to provide drug coverage to the one-third of senior citizens who don't have it.

Gore, most directly, and Bush, in more complex ways, want to reshape Medicare to subsidize drug costs for the elderly and pick up the tab for the poorest of them. Neither supports price controls.

Congress has been trying to respond, too. Lawmakers are moving to ease restrictions on importing U.S.-made drugs that are sold in other countries, often for much less.

The appetite for Medicare drug coverage is demonstrated consistently in polls.

In a Pew Research Center survey this month, 91 percent of respondents favored making drug benefits part of Medicare.

By the standards of public opinion testing, that's about as close as anything comes to unanimity.

EDITOR'S NOTE -- AP Medical Writer Lauran Neergaard contributed to this story.