In a big win for the pharmaceutical industry, the Senate on Tuesday killed legislation that would have made it easier for Americans to buy their prescription drugs from abroad, where prices are generally much cheaper.
The count was 51 to 48, nine shy of the supporters needed to overcome a filibuster. Thirty Democrats and Independent Sen. Joe Lieberman (Conn.) voted to kill the provision.
The amendment, sponsored by Sens. Byron Dorgan (D-N.D.) and Olympia Snowe (R-Maine), has been a week-long thorn in the side to Democratic leaders — not because they opposed the provision, but because it threatened to undermine a deal cut earlier in the year between the White House and the nation’s pharmaceutical companies. Under that agreement, the drug makers pledged up to $80 billion toward health-care reform over the next decade if Democratic leaders would withhold their support for several proposals that would cut further into the companies’ profits, including the drug re-importation provision. As a result, White House officials in recent days had urged Democrats to oppose the Dorgan-Snowe amendment, with the FDA writing a letter to senators warning that the agency “does not have clear authority over foreign supply chains.”
Under the provision, Americans would be allowed to buy FDA-approved drugs from certain countries with well-established drug-safety regimes, such as Canada, Australia Japan and those in Europe. Supporters say it will save U.S. consumers roughly $80 billion over the next decade. The Congressional Budget Office estimates that the federal government would save an additional $20 billion over the same span, the result of savings to federally funded programs like Medicare.
The reason is clear: Americans pay more for pharmaceuticals than any other country in the world. Dorgan pointed out that the same Nexium prescription that costs $424 in the U.S. would cost just $67 in France, $40 in the United Kingdom, $37 in Germany and $36 in Spain.
“We shouldn’t be paying the highest prices in the world for prescription drugs,” Dorgan said. “I think it’s flat-out unfair.”
Aside from Snowe, the provision attracted the support of such influential Republicans as Sens. John McCain (Ariz) and Charles Grassley (Iowa), the ranking member of the Finance Committee.
Opponents of drug re-importation argue (1) that there’s no good way to ensure that imported drugs are safe for American consumers, and (2) that the resulting loss in drug-maker revenues would curb the research conducted by those companies, leading to the discovery and development of fewer new innovative drugs.
Critics of the latter are quick to point out that the pharmaceutical industry is perennially among the most profitable. Indeed, last year it ranked third among all industries, reaping 19.3 cents in profits for every $1 in revenues, according to Fortune Magazine.
Senate lawmakers on Tuesday also killed a weaker substitute to the Dorgan-Snowe amendment, sponsored by Sens. Frank Lautenberg (D-N.J.) and Robert Menendez (D-N.J.). Both argued on Tuesday that the Dorgan amendment simply wouldn’t guarantee that the imported drugs were safe. (Strangely enough, both also voted in 2007 in favor of proceeding to a similar Dorgan-Snowe bill.)
“It’s regressive,” Menendez said Tuesday. “It hearkens back to a time when the lack of sufficient drug regulation allowed people to sell snake oil and magic elixirs that promised everything and did nothing.”
Critics in and out of the Capitol, however, say the substitute was so stringent that it will effectively prohibit drug importation. The AARP, which for years, has endorsed the Dorgan-Snowe amendment, argued that the Lautenberg-Menendez provision represents “a thinly veiled effort to undermine importation and preserve the status quo of high drug prices.”
The substitute amendment was shot down by a count of 56 to 43.
The debate proved a pickle for President Obama, who had endorsed reimportation on the campaign trail but was forced to change his tune this year for fear of losing the pharmaceutical lobby’s support for the underlying health-care reform bill.
“When you become president, you realize that the sound bites don’t always work in reality,” Ken Johnson, senior vice president of the Pharmaceutical Research & Manufacturers of America, told The Washington Post this week.
The money that the drug makers have pumped into Congress in recent months couldn’t have hurt their case. Indeed, the industry has contributed roughly $7.5 million to lawmakers this year, with 57 percent going to Democrats — up from 33 percent in the 2006 cycle, and 50 percent in the 2008 cycle – according to the Center for Responsive Politics.
In terms of lobbying, the dollar figures are even higher. PhRMA, representing the brand-name drug makers, has spent more than $20 million lobbying Congress this year alone, CRP says.
“It’s really regrettable that the special interests prevail, and the power of the pharmaceutical lobby,” McCain said Tuesday. “It’s not one of the most admirable chapters in the history of the United States Senate.”