Healthy Skepticism Library item: 13225

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Publication type: news

Marcus A, Rapaport L.
McCain's Health `Jihad' May Cost Pfizer, Doctors
Bloomberg.com 2008 Mar 20
http://www.bloomberg.com/apps/news?pid=20601202&sid=aziX4XjjtFSw&refer=healthcare

Full text:

John McCain is bolstering his reputation as a maverick by encouraging Americans to buy lower- priced drugs from Canada, a plan that may cost Pfizer Inc. and the drug industry $40 billion over 10 years.

McCain, the Republican presidential candidate, says crossing the border for less-expensive drugs will increase health-care access by lowering costs. Spending on doctor services can be cut too, he says, by paying set fees for disease treatments, not on the amount of care provided. He also wants to encourage the purchase of insurance by offering a tax credit paid for by taxing workers’ health benefits for the first time.

Supporters say that by attacking health costs, the Arizona Senator can make care more affordable for the 47 million Americans without coverage. Opponents say the ideas are unrealistic. Taking on health care spending also isn’t likely to win him support from an industry traditionally pro-Republican.

``If you take his platform en masse, and began with his premise that it’s about cost and not access, then you can pretty much declare a jihad against all the stakeholders in the system,’‘ said Paul Keckley, director of the Deloitte Center of Health Solutions in Washington, D.C., in a phone interview.

Drug import legislation died in Congress when proposed in 2003. Health insurers, led by Wellpoint Inc. and UnitedHealth Group Inc, triggered consumer backlash with flat-rate payments to doctors in managed care policies in the 1980s.

Past Opposition

A renewed call isn’t likely to be any more successful, said Robert Laszewski, president of Health Policy & Strategy, an Alexandria, Virginia-based consulting firm.

Americans spend 16 cents out of every dollar on health care, and the cost will rise by 20 cents within a decade if the system isn’t changed, according to a report in February by U.S. government economists. Senator McCain of Arizona says people need incentives to reduce wasteful health-care spending.

``The problem is not that most Americans lack adequate health insurance,’‘ McCain, 71, said in October, when he first outlined his health policy. ``The biggest problem with the American health-care system is that it costs too much.’‘

McCain would attack drug costs by allowing Americans to legally purchase medicines from Canada, where prescriptions can often be half the price.

A Canadian review board negotiates payments with drug companies and sets price caps on medicines sold there, lowering costs. The U.S.-funded Medicare program for the elderly doesn’t negotiate prices.

Special Interests

McCain isn’t worried about riling interest groups, such as drugmakers, said Douglas Holtz-Eakin, the candidate’s policy adviser, in an interview.

``It’s not a plan that’s meant to solve constituent problems,’‘ said Holtz-Eakin. ``It’s meant to solve a pressing national policy issue.’‘

Pfizer’s Lipitor, the world’s biggest selling drug with $12.7 billion in worldwide revenue last year, cost $60.78 for a 30-day supply of 20 milligram pills on the Web site CanadaDrugs.com, which is licensed in Manitoba, Canada to ship to U.S. patients. Bellevue, Washington-based Drugstore.com Inc. sells the same pills for $119.99, almost twice as much.

``If there are ways to bring greater competition to our drug markets by safe re-importation of drugs, by faster introduction of generics, or by any other means we should do so,’‘ McCain said in October.

Drugmakers could lose $40 billion over 10 years if pharmacists, wholesalers and individuals were allowed to import drugs into the U.S., according to a 2003 report by the Congressional Budget Office.

Tax Credit

Democratic presidential candidates Hillary Clinton, senator from New York, and Barack Obama, senator from Illinois, propose using subsidies and expanding government health programs to cover the uninsured, while holding down costs by encouraging use of electronic records and more preventive care.

Lifting restrictions on buying medicines abroad isn’t safe because U.S. regulators couldn’t block overseas counterfeiters selling through the internet, Ken Johnson, senior vice president of Pharmaceutical Research and Manufacturers of America, a drug industry trade group based in Washington, said in a statement.

McCain would also offer a tax credit of $5,000 for couples and $2,500 for individuals to help Americans pay for private health insurance.

The candidate would pay for the credit by taxing employer- paid benefits that are now tax-free. President George W. Bush offered a similar plan last year and it was rejected immediately by Congressional Democrats.

Cost-Saving Experiments

Pete Stark, a Democratic congressman from California, attacked Bush’s proposal in January, 2007, saying it would undermine America’s employer-based health care system. Democrats say such a plan would force people to shop in a market where insurers can charge higher premiums and reject people with diabetes, cancer or heart disease.

Doctors may oppose McCain’s proposal to rework payments under Medicare, the U.S. health insurance program for the elderly and disabled. To save money, McCain wants to give physicians a so-called bundled fee for treating a condition such as heart disease instead of reimbursing each procedure as they do now.

Horizon Blue Cross Blue Shield, the non-profit New Jersey insurer based in Newark, began testing new physician payments in 2006. Doctors who made sure diabetic patients got necessary lab work and prescriptions got higher fees to prevent hospital stays and emergency room visits.

After one year, the monthly cost of treating each diabetic patient in the program dropped to less than $900 from more than $1,000 before the program began, said Andrew Schuyler, executive medical director, in a telephone interview.

Rewarding doctors who keep patients healthy and out of the hospital makes sense, said Jack Lewin, chief executive officer of the American College of Cardiology in Washington, D.C., in an interview. Payments must be high enough that doctors don’t skip needed care to break even, he said.