Healthy Skepticism Library item: 1389

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Publication type: news

Romney advises drug companies to rethink how much they charge: The governor says pricing policies and exhorbitant salaries will drive more consumers to Canada where prescription drugs are cheaper
The Associated Press 2003 Aug 13

Full text:

BOSTON — Governor Romney advised pharmaceutical companies yesterday to change their drug-pricing strategies and avoid exorbitant executive pay to help avert a crisis that is taxing state budgets and sending seniors to Canada to fill prescriptions.

Speaking at the Drug Discovery Technology World Congress, the Republican governor reverted to his days as a corporate consultant, urging the industry to be more conscious of the public relations impact of their financial decisions.

“The pricing model which you employ … has to be rethought,” said Romney, a keynote speaker at the conference. “An important part of drug pricing has to be the implications of drug pricing on public opinion, on political opinion, on the way our entire governmental system approaches the industry.”

Romney also cautioned the industry about executive pay, saying that the “compensation of one or two people can distort the view of the American public upon the purpose and the direction of an entire industry.”

Like many governors around the country, Romney is in the awkward position of trying to lure pharmaceutical and biotech companies to the state, in order to bolster the tax base, while simultaneously trying to reduce the amount state government pays for prescription drugs each year.

In addition to recommending changes for the industry, Romney urged the federal government to approve a drug benefit for the elderly under Medicare and again promoted the idea of rethinking the state’s health-care delivery system.

Also speaking at the conference was Food and Drug Administration Commissioner Mark B. McClellan, who said the industry and the government must find a more efficient and less costly way of translating laboratory innovations into safe products.

The high cost of prescription drugs is exacerbating the financial burdens of states already contending with a steep decrease in tax revenues. It has also caused widespread outrage from the public, which believes pharmaceutical companies are making profits at the expense of the ill and infirm.

Industry officials argue that the prices they charge help cover the high cost of developing and testing the drugs, which can take more than a decade, and allows them to continue researching drugs that will lead to new innovations in the field of medicine.

“I recognize that for you to continue to do the critical work of developing and discovering drugs that cure people of disease, you have to have the flow of capital to make that possible,” Romney said.

In late July, the U.S. House of Representatives gave a lopsided victory to a bill that would allow Americans to import lower-cost drugs from FDA-approved facilities in Canada, the European Union and seven other nations. The Senate is scheduled to take up the issue when it reconvenes after the summer recess.

Senior citizens have been turning to Canada for relief on drug costs, driving there in buses to fill their prescriptions. A bill under consideration in Massachusetts would instruct the state to provide residents with information about how to obtain FDA-approved drugs in Canada.

The state of Massachusetts spends about $1 billion annually on prescription drugs. As part of the state budget this year, the legislature approved a bulk purchasing plan that would have required Romney to use the state’s bargaining clout to negotiate better prices on drugs.

Romney changed the bill when it came to his desk, exempting large groups of patients, including Medicaid recipients, from the negotiating pool.

As part of his speech, Romney also urged the industry to become more savvy about communicating with the public about the cost and complexity of developing drugs and how few of them actually come to fruition.

After he was done, Norton Peet, chief executive officer of Aurigene Discovery Technologies, said “I feel like we’ve all just had a job performance review.”

Hours after addressing industry leaders, Romney appeared at a media conference with executives from eight Massachusetts life sciences companies who will create 700 new jobs in the state over the next three to five years.