National Symposium on Drug Importation: Not a Solution to State Budget Problems

Published November 21, 2003

Everybody relax a minute. It’s just a state senator up here. This is not a policy expert!

I’m very, very interested in being here and happy to be able to participate, but somewhat reluctant to go first. It’s always easier for people like me sometimes to hear the policy experts and then react.

I’ll try to give you my impressions as a policy maker who has spent 11 years on the Senate Appropriations Committee. I’ve specialized in Medicaid funding, and have had the opportunity to work on pharmaceutical acquisition issues for the state of Illinois intensively for eight years. But, I certainly don’t have the economics background of the other panelists you’re going to hear. So, I’ll ramble a little, try to draw some points and some conclusions and try to maybe illuminate the question from a political point of view and then turn it over to the policy experts, who I’m sure will follow up and give you better data.

Not a Real Solution

What we’re embarked on in Illinois is no real solution to a problem we really do need to talk about. Illinois’ challenge, our budget challenge, does not revolve around pharmaceutical issues. It revolves around stewardship and our revenue streams. It is so easy and dangerous for governors and politicians in general to politicize things and take the easy path and argue that the solutions to their problems are somehow vested in multimillion-dollar companies that are obeying the law.

Illinois has the country’s most comprehensive senior and low-income support system for people who need access to pharmaceuticals. To argue that access is a problem in the state of Illinois is to argue it must be an even worse problem in other states. We have acted aggressively in the General Assembly over the last four years to make sure that means-tested programs are in place for seniors up to household incomes in excess of $25,000 based on net tax earnings. So, there are programs in place to make sure pharmaceuticals are available and stay accessible.

Governors and other elected officials who argue that importing Canadian price controls into our market-driven system is in either the short-term best interest or the long-term best interest of Illinois consumers or federal and state governments are wrong. And I think people have to stand up and talk about that. We have a system in the United States that is the safest in the world. Safety and certainty and efficacy have always been the hallmark of the FDA’s approach to the whole pharmaceutical industry. We force drug companies to spend hundreds of millions of dollars researching and jurying the products they want to bring to market, both for their effectiveness and their safety.

Impact on Research and Development

Drug companies have been engaged in a 50-year search for the next compound, the next therapy that will make a difference in Americans’ lives. The entire world benefits from the progress made in American pharmaceuticals. To argue that we ought to use arbitrary price controls established by other countries as a basis for establishing—essentially, through market mechanisms—pricing in the United States is to walk away from our commitment to protecting the intellectual property that’s been discovered by the pharmaceutical companies.

If we’re satisfied that we have now discovered every compound we want, we have solved every health problem that we’re willing to work on, we can just simply expropriate the intellectual property of drug companies and end the whole idea of research. If you won’t pay people to do research, to do testing, to do evaluation and to do discoveries, don’t expect them in a market-based economy to be willing to engage in that.

As European countries and the Canadians have imposed price controls on the prices of pharmaceuticals in their countries, less and less research is done anywhere but in the United States. The latest numbers I’ve seen show that well over 80 percent of all the pharmaceutical inventions and breakthroughs in the past 10 years have taken place in the United States, mostly by companies seeking to find a compound that does something they can sell for a profit in the marketplace.

It’s important that drugs be affordable, but it’s also important to have that next generation of drugs. If we’re not willing to be committed to that, we really are doing our children a massive disservice. I think we ought to face up to that. The governor of the state of Illinois was willing to borrow $10 billion on an arbitrage scheme in the market and allow my 20-year-old son at the age of 49 to pay that off. He and other public officials apparently are willing to risk the investment that the pharmaceutical industry makes in research and development in some kind of short-term stampede to hide their budgetary problems under the blanket of lower pharmaceutical prices.

To argue that state government, as an organized entity, ought to be pursuing things that violate the FDA-regulated distribution chain, that violate our trade agreements, and that violate federal law, seems to me to be either a misguided notion by a chief executive who doesn’t know his fundamental responsibilities or an effort to hide the ball at a very difficult time for state leadership.

Real Solutions

There are real solutions available to Americans for the issues concerning prescription drugs, and I think those ought to be the focus of discussion. But, seemingly, the same people arguing for Canadian price controls being imported in the United States are unwilling or unable to deal with the real fundamental problems that drive up the cost of pharmaceuticals in America.

We need fundamental court reform in the United States. The class-action lawsuits and the tort system drive up costs for all large manufacturers, in particular people making sensitive and groundbreaking innovative products. We have the most expensive tort system in the world. I know there are people on the other side of the aisle from me in politics who find that untouchable. You can’t raise that issue, because it affects their basic support base. But, if we want to talk about real relief and pricing from the general public, we need to talk about court and tort reform and we need to be honest about it.

We need to talk about speed-to-market reforms. We need to take a look at what part of FDA testing really is efficacious and makes sense and which part slows our speed to market. We need to have that done, though, by researchers who aren’t being politically pressured. Some drugs obviously should be moved to market faster if they’re lifesaving and the risks are worth shortening the process. Other countries bring pharmaceutical inventions to market faster and we need to see if they’ve discovered some shortcuts that would reduce the unnecessary costs we have imposed on our pharmaceutical research companies.

We need to be honest about taking a look at utilization review. Something like 75 percent of all Ritalin prescribed in the world is prescribed in the United States. We are a country that has to face up to the fact that if we’re going to use 75 percent of the world’s pharmaceuticals, we’re going to pay for at least 75 percent of the world’s pharmaceuticals.

I have been witness to state agencies refusing to turn over records for industry-requested efforts to take a look at utilization review. We have people in the Medicaid system who are now receiving seven, eight, nine, and ten prescriptions each month. In some cases that may be entirely appropriate, but it ought to also be entirely appropriate to make sure a practitioner who understands the interactions of pharmaceuticals is looking at that cocktail mix of pharmaceuticals they’re taking to make sure we don’t have two or three medical providers prescribing conflicting drug regimes. So governments, like our state, that want to lower spending ought to be taking a hard look at the utilization review.

We, in state and federal government, need to take a look at means-tested support. We need to make sure pharmaceuticals are accessible to people in the United States who have problems affording them. We need to stay committed to that. And we need better regulation of our wholesale market. We need to make sure people purchasing drugs for use in hospice and nursing-home care are not reselling those drugs in the marketplace and putting the safety of that system at risk.

And we need a more fundamental effort at generic awareness. Much of the individual consumer’s drug bills can be affected if they take a hard look at generic alternatives. Those are real solutions to a real problem that do not undercut our opportunity to have future innovations.

Most of all, we have to encourage consumers to be responsible about their health care. There is no quick fix on the Web. If the drug’s not prescribed, you ought not to be ordering it. We ought not to encourage people to self-medicate. We’re seeing more and more abuses of that. There are people on the Internet willing to prey on Americans’ desire to find the pill that solves all their problems. And that’s fundamentally a flaw we have in our society.

I think we need to be very cautious and when we move public policy that we’re honest about the value of intellectual property, that we care enough about what research means to future generations, and that we ought to be very deliberate in our efforts to improve the situation on pharmaceutical drugs. We also need to keep it in perspective. It is not a solution to the state budget any more than the Illinois lottery was or riverboat gaming was. So, to hide behind that in the political atmosphere the state is in today, and saying Canadian-style prices would solve Illinois’ problem, is untrue. We need to be committed to making sure we do the right things.

Sen. Steve Rauschenberger has represented Illinois’ 22nd Senate District since 1992 and currently serves as Assistant Minority Leader. He received his bachelor’s degree in business administration from the College of William & Mary.