A European Warning

The Senate still threatens to pass legislation that would allow imports of drugs from abroad to take advantage of other countries’ price controls.

But two recent conferences in Washington featuring European health care experts shed new light on the dangers.

  • “Once you allow the importation of drugs from Europe, you allow the importation of drugs from everywhere,” British security expert Graham Satchwell warned at a conference last Tuesday sponsored by the Pacific Research Institute. Drug importation encourages drug counterfeiting, opening channels to get bogus drugs into the market more easily, he said.

  • “Counterfeiting medicines is criminal and life threatening and undermines the integrity of health systems, but it is hard to detect because it is an increasingly sophisticated business activity,” said Dr. Jonathan Harper, the lead author of a report for the Council of Europe on counterfeit medicines. He said that counterfeiting medicines is clearly aligned with organized crime and warned this is becoming “the 21st century bio-terrorism.”

  • At a media luncheon two days later, sponsored by the Galen Institute and the Institute for Policy Innovation, Julian Morris of the International Policy Network, a London think tank, said drug importation “allows free or very low-cost drugs intended for poor counties to enter developed markets. If drugs go from Europe to Africa and back to Europe, they may be degraded because of improper handling, even if they are legitimate.”

  • But it gets worse: A recent World Bank report said that 53% of anti-malaria drugs in Southeast Asia were counterfeit and had no active ingredient, often a death sentence for people who desperately need this medicine.

  • Artificially holding down drug prices in Europe also is causing a brain drain of top research scientists in Europe because there is too little money for research and innovation, according to Tim Evans of the Centre for the New Europe in Brussels. “Europe is just beginning to see that money must play a role in health care,” Evans said. “If America sells out on the paradigm of innovation, it will be terrible for Europe and the world.”

  • “For the sake of innovation for the planet, America must remain robust with a vibrant, competitive health sector and not go down the European road of socialized medicine,” he pleaded.

Jacob Arfwedson, a fellow with the Institut Economique Molinari in Paris, Alberto Mingardi with the Instituto Bruno Leoni in Rome, and Stephen Pollard with the Center for the New Europe in Brussels agreed that the U.S. must set the standard for a robust free market.

The White House has signaled it will hold the line on drug importation. The administration sent a message to Congress on Sept. 19 saying that “the President’s senior advisors would recommend that he veto” drug importation legislation that didn’t include safety provisions for American citizens.

“The Administration believes that allowing importation of drugs outside the current safety system established by the Food and Drug Administration without addressing these serious safety concerns would threaten public health and result in unsafe, unapproved, and counterfeit drugs being imported into the United States,” the message warned.

The political momentum for this issue is being overwhelmed by the facts. It’s time to let this bad idea die.

Grace-Marie Turner

RECENT NEWS ARTICLES AND STUDIES:

  • HSAs and the states: Lifting the barriers
  • Fixing America’s health care system
  • How private health insurance pools risk
  • Dismantling barriers to better medical information
  • “Choice” in health care: What do people really want?
  • Katrina’s victims deserve better than Medicaid
  • Health and spending of the future elderly

HSAs AND THE STATES: LIFTING THE BARRIERS
Author: David Hogberg, Ph.D.
Source: Galen Institute, 09/28/05

State governments need to do more to facilitate the adoption of health savings accounts (HSAs), writes David Hogberg of the Capital Research Center in a new paper for the Galen Institute. Hogberg examines state regulations that obstruct HSA plans, including first-dollar coverage mandates, community rating and guaranteed issue laws, and insurance approval processes. Hogberg also writes that states that haven’t done so should conform their income tax codes so that deposits to HSAs are exempt from state income taxes, and he recommends that the states offer HSA plans in high-risk pools, state employee health plans, and Medicaid programs. “By taking these actions, states can do their part to move our society closer to a health care system with lower prices, better quality, and more choice,” concludes Hogberg. Full text: www.galen.org

FIXING AMERICA’S HEALTH CARE SYSTEM
Author: David B. Kendall
Source: Progressive Policy Institute, September 2005

David Kendall of the Progressive Policy Institute has outlined a comprehensive plan for “Fixing America’s Health Care System” that includes a range of policy ideas with appeal on both sides of the aisle. “What is missing today is the political imagination and courage to move to a new vision of universal health care – one in which government takes action in the public’s interest, without seizing control of the system,” he writes. Kendall offers six categories of recommendations: “1) Universalize the health care choices members of Congress enjoy, 2) Require shared responsibility for the cost of coverage, 3) Pay doctors and hospitals according to their performance, 4) Deploy information technology for better care and lower costs, 5) Create health courts for fair and reliable justice in malpractice cases, and 6) Create a National Cure Center to speed medical breakthroughs.”
Full text: www.ppionline.org

HOW PRIVATE HEALTH INSURANCE POOLS RISK
Author: Mark Pauly
Source: National Bureau of Economic Research, Summer 2005

Wharton Professor Mark Pauly describes recent research that he and several colleagues have conducted that shows the current health insurance market is more efficient at pooling risk than people believe. He adds that purchasing insurance with “a longer time perspective,” in conjunction with guaranteed renewal laws, protects people from having their premiums jump if they suddenly face a major illness. “Our overall conclusion is that private health insurance in the United States involves a great deal of risk pooling as long as individuals initially obtain insurance (whether individual or group) before they contract chronic illnesses and thus become high risks,” Pauly writes. “Both private guaranteed renewability provisions and state rate regulation encourage pooling, but guaranteed renewability seems to have fewer adverse side effects in the sense of driving lower risks out of the market, albeit with slight smaller efficacy.”
Full text: www.nber.org

DISMANTLING BARRIERS TO BETTER MEDICAL INFORMATION
Author: Scott Gottlieb, M.D.
Source: U.S. Food and Drug Administration, 09/27/05

In a speech before the National Press Club, Dr. Scott Gottlieb of the Food and Drug Administration examined the FDA’s role in improving the communication of medical information. “At FDA, important medical information too often remains bottled up, shielded behind an over-worked and over-burdened staff, and preventing it from being more quickly redacted of its commercial and confidential content so that bottom line medical results are made public,” said Gottlieb. The FDA needs to “do a better job of generating the most useful information for informing medical practice, and especially?a better job of getting this information into the right format at the right place so that patients and doctors have it when they need it,” said Gottlieb. For example, the FDA has introduced several new initiatives “to create an information architecture that will enable more timely and complete medical information at the point of care?this comprises a big step into the future of healthcare information, a future when medical decisions can be guided by the most up-to-date and reliable information possible,” said Gottlieb.
Full text: www.fda.gov

“CHOICE” IN HEALTH CARE: WHAT DO PEOPLE REALLY WANT?
Author: Jeanne M. Lambrew, Ph.D.
Source: The Commonwealth Fund, September 2005

George Washington University Prof. Jeanne Lambrew takes up the issue of “choice” in health care and finds two out of three adults surveyed prefer the current system of employers selecting plans over an alternative that barely exists – a defined contribution they would use to find coverage on their own. She says people value having a choice of health care providers more than a choice of health plans. Her conclusion is that “policymakers should be cautious about embracing the individual market and health savings accounts as a way to improve satisfaction in the system.”

Choice is clearly the important consideration in health care, but then we look further at the study to see what this means: First, employment-based health insurance is the 800-pound gorilla that dominates the market, so most people see few alternatives now. Asked to weigh something they know against something they don’t, they of course pick what they know. Second, the survey itself shows that, “three-quarters of Americans with employer-sponsored coverage (74%) were very or somewhat confident in their ability to make their own health plan choices.” This validates other surveys that show people are ready for more choices, but the funding mechanisms need to be available for them to take action. In this, we see opportunity, not a reason to lock the system into the status quo.
Full text: www.cmwf.org

KATRINA’S VICTIMS DESERVE BETTER THAN MEDICAID
Author: Nina Owcharenko
Source: The Heritage Foundation, 09/26/05
“Members of Congress, as well as state policymakers, should be wary of a major Medicaid expansion as the primary vehicle for the delivery of care to Hurricane Katrina survivors,” writes Nina Owcharenko of The Heritage Foundation. Owcharenko writes that “a massive Medicaid expansion” is a bad idea for at least four reasons: 1) Unlimited federal funds to Medicaid creates opportunities for gaming; 2) States will likely face future financial difficulties as a result of expanded Medicaid eligibility; 3) Private health care coverage will be displaced as Medicaid expands; 4) Individuals that must rely on Medicaid “are forced to depend on a low-quality health care program.” Policymakers should instead provide premium subsidies for private health insurance, limit Medicaid enrollment to those currently eligible and enrolled in the program, and offer emergency health grants to the states, concludes Owcharenko.
Full text: www.heritage.org

HEALTH AND SPENDING OF THE FUTURE ELDERLY
Source: Health Affairs Web Exclusives, 09/26/05
This new collection of papers from Health Affairs offers a look at how Medicare spending will evolve as the elderly population in the U.S. rapidly increases over the next thirty years. The RAND corporation, under the direction of Dana Goldman, has developed a sophisticated model to examine different health, technology, and cost scenarios for the elderly into the future. One conclusion: “society faces its greatest spending risk not from demographic and health trends, but rather from medical technologies.” In contrast, Harvard Professor David Cutler is more optimistic about innovations that could help Medicare. “The technological changes that the RAND authors consider will likely come to pass, and they will drive up Medicare spending (often with good value),” writes Cutler. “But there is enormous potential for cost savings as well, which we have the capacity to realize.”
Full text: content.healthaffairs.org

UPCOMING EVENTS:

Webcast – Ask the Experts: Medicare Part D
A kaisernetwork.org program
Thursday, October 6, 2005, 2:00 p.m. ET

Watch the live webcast at Full text: cme.kff.org/Key=9269.F1F.C.D.HLy2WK.

Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features research and writings by participants in the Health Policy Consensus Group, articles of interest from the health policy world, and announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at http://www.galen.org/.

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