08/2002: The Galen Report

Published August 1, 2002

As Congress investigates the investigators about what intelligence the FBI and CIA had before the September 11 attacks, we see rising concern about our lack of preparedness for the next potential attack with biological weapons.

Many experts warn we are wasting valuable time in preparing ourselves for one of the most lethal and deadly weapons: smallpox virus. Unlike anthrax, there is no cure. The only protection is immunization.

The Cato Institute held a powerful forum providing chilling evidence that the federal government, which controls all of our stores of smallpox vaccine, will not be able to respond in time to distribute the vaccine and inoculate millions of people after an attack, as is its current plan.

It is imperative the government change its strategy to allow people who want to be vaccinated to do so now. A recent Robert Wood Johnson Foundation survey said 59 percent of Americans would be vaccinated for smallpox if the government would release the supplies.

The Washington Post recently reported on the smallpox threat and a series of forums giving the public a chance to have its say. The Bush administration wants a recommendation from the Centers for Disease Control.

Separately, Robert Goldberg of the Manhattan Institute hosted a Capitol Hill forum on “Medical Progress and the FDA: Our Future is in the Balance.” The theme was the need for reform of federal policies to keep pace with evolving science and technology in the pharmaceutical industry. For example, as medications can be tailored to an individual patient’s needs, the concept of massive clinical trials will be obsolete. The Food and Drug Administration should shift its focus to safety testing to allow researchers to make this next giant leap in medical progress.

Grace-Marie Turner


The House Medicare Bill: a Proposal Only a Politician Could Love
Jeff Lemieux

Jeff Lemieux of the Progressive Policy Institute says the Medicare prescription drug bill crafted by House Republicans “fails on several levels: the drug benefit is unlikely to work [because of adverse selection], the stand-alone design would further balkanize seniors’ health coverage and thereby thwart Medicare reform, and new price controls would push problems into the future, rather than working to solve them now.”

Lemieux calculates the net benefits for seniors at different drug spending levels under the plan. He finds the maximum net benefit for those with annual total drug expenses between $2,000 and $5,600 to be $680 after taking the premium, deductible, and coinsurance into account. If seniors had drug expenses of $500 per year, they would actually lose $220 by signing up for the program. He finds only those with the highest drug spending (above $5,600) would have much to gain by entering the Republican drug plan.

As an alternative, Lemieux proposes a zero-premium, high deductible, catastrophic-only drug plan that would be mandatory for all Medicare beneficiaries and would thus avoid the pitfalls of adverse selection while fitting into tight budget constraints.

Source: http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=111&subsecid=141&contentid=250584

Patent Protection for Me, But Not for You
Dr. Merrill Matthews, Jr.

Merrill Matthews takes on Business for Affordable Medicare (BAM)—the coalition of big employers, labor unions, and governors—for fighting aggressively to defend their own patents while trying to undermine pharmaceutical companies’ patent rights.

“The real issue driving the BAM coalition is drug cost,” Matthews writes. “Prescription drug utilization has been rising across all segments of the population for years—because there are more drugs to treat more illnesses.” BAM’s mission is to open up the Hatch-Waxman Act to allow speedier access to generics.

However, since passage of Hatch-Waxman in 1984, domestic pharmaceutical research and development spending grew from $3.4 billion in 1985 to about $23.9 billion in 2001. Matthews argues the generic industry has also prospered under this act, with its market share going from 19 percent of volume in 1984 to 47 percent in 2000. “Undermining [pharmaceutical patent] protections won’t increase competition and lower costs, it will increase costs and kill innovation,” he concludes.

Source: http://www.galen.org/news/Patent_Protection.pdf

Pharmaceutical Innovation: Lowering the Price of Good Health
Neal A. Masia, Ph.D.

Economist Neal Masia of Pfizer cites in this monograph a wealth of research that quantifies the value of pharmaceutical innovation in improved health, economic performance, and quality of life. For example, one study he cites found that AIDS “treatment costs per patient fell by nearly $300 per month after introduction of the first cocktail in 1997, despite the increase in drug costs.” Further, new treatments for Alzheimer’s disease are initially costly, but they help patients avoid or reduce nursing home care over a period of time to save thousands of dollars per patient. He also cites evidence of overall cost savings from drug treatments for asthma, migraine headaches, heart disease, depression, influenza, and others.

Masia concludes, “Public policy initiatives can and should assist those in need without jeopardizing the market reward structure that has reliably fueled medical advances of nearly incalculable value.”

Source: http://www.pfizer.com/pfizerinc/policy/er22.pdf

The Role of Federal Government in Healthcare Reform
Grace-Marie Turner and Quentin Young, M.D.

The BlueCross BlueShield Association offers an information-packed Web site, including a “Point-Counterpoint” debate on health policy issues. The current series features free-market advocate Grace-Marie Turner and government-control advocate Dr. Quentin Young, who is national coordinator of Physicians for a National Health Program.

Each installment in the series allows the authors to share their viewpoints regarding the successes and failures of the government’s involvement in the health care insurance system, the most appropriate role for government in the health care delivery system, and what role government should play in helping to reduce the cost of health care.

Source: http://www.bcbshealthissues.com/perspectives/

Material for this report is provided by The Galen Institute, P.O. Box 19080, Alexandria, VA 22320, http://www.galen.org. Grace-Marie Turner is president. This report is produced by Elizabeth Lamirand, who can be reached at 703/299-9550, and edited by Conrad F. Meier, managing editor of Health Care News.