Drug makers attack US price review proposal: Scheme based on Canadian model would amount to 'price regulation under another name', say opponents

THE WORLD'S largest pharmaceuticals companies yesterday scorned a US government compromise proposal on drug pricing, labelling the suggestion 'government price regulation under another name'.

The proposal by the Clinton administration's healthcare reform task force was leaked to American newspapers yesterday. It would embrace the industry's offer of voluntary controls but would have them monitored by a board that could publicly criticise drug makers that charged 'unreasonable prices'.

The Pharmaceutical Manufacturers Association, which includes big British drug makers such as Glaxo, Wellcome, Zeneca and SmithKline Beecham, described the proposed national review board as a bureaucratic scheme that would be redundant and counter-productive.

An intensive lobbying campaign, among the most expensive mounted in Washington, appears to have convinced the task force, headed by Hillary Clinton, to abandon plans for direct government controls on the price of prescription drugs distributed in the US.

But, concerned about a potential windfall for manufacturers once drug coverage is extended to an additional 72 million Americans, the task force is proposing a board, modelled on a highly successful review agency in Canada, that would collect price data and complain about overpriced drugs that have no competitors.

While drug prices in the US rose at twice the rate of inflation in the 1980s, prices in Canada for many of the same prescription drugs were 3 to 68 per cent lower.

The existence of a Canadian agency, the Patented Medicine Prices Review Board, was the main reason for the discrepancy, according to a US congressional study.

But the drug companies said that since the beginning of the 1990s their prices had been rising more slowly than others and 16 of the largest manufacturers had proposed voluntary agreements to keep the overall increase in the price of their products in line with inflation.

The industry has maintained that market pressures were already acting to keep drug prices down and government controls would only reduce incentives to spend money on researching new drugs.

'We have proved that voluntary measures work while they give us the flexibility we need to keep our products competitive,' said Rick Sluder, a spokesman for Glaxo's US subsidiary.

'A board would be a level of bureaucracy that is completely unnecessary.'

Glaxo, the world's second-largest drug manufacturer, was ready to 'open the books' to independent auditors to allow the public to verify its restraint agreement while preserving the confidentiality of its pricing structure, he said.