Good News

Medicare went live yesterday with a website providing its first-ever drug price comparison tool. The site is designed to help Medicare beneficiaries choose a prescription drug discount card by providing competitive pricing information about the specific basket of medications they are taking. Seniors can go to or call 1-800-Medicare. We’ll have lots more on this next week?.


“Consumer-Directed Doctoring: The Doctor is In, Even if Insurance is Out” was the subject of a Joint Economic Committee hearing Wednesday. Chairman Bob Bennett (R-UT) invited three doctors to describe their practices, each of which have chosen quality patient care over third-party insurance contracts.

? Tennessee Dr. Robert S. Berry described his pay-as-you-go practice — PATMOS EmergiClinic– that posts the prices of each service up front, providing an option for quality care for people who generally don’t have health insurance

? Dr. Alieta Eck of New Jersey runs a faith-based charitable clinic to treat the poor and uninsured and also is part of a multi-specialty practice that tells patients we want “to be their doctors, not the servants of their insurance company.”

? Dr. Bernard Kaminetsky of Florida operates a practice that specializes in preventive medicine, working to keep his 600 patients well instead of running 2,000 patients a year through his practice with only a few minutes for each one.

The common theme: These doctors are happy with the practice of medicine because they are able to focus on their patients, not fighting with insurance companies and filling out mountains of paperwork.

An even more remarkable result of the hearing was the harmony between Senator Bennett – a free-market conservative – and Ranking Democrat Pete Stark – an avowed liberal. Mr. Stark said that Dr. Kaminetsky’s “boutique” medicine “isn’t inherently bad,” agreed that low-deductible health policies actually increase utilization and therefore costs, and that fee-for-service medicine incentivizes the health care industry to “do more to get paid more.”

The doctors’ testimonies were compelling. Here’s the link: Doctors like this not only provide a beacon for their profession but also give essential information to Congress about how consumer centered health care is actually providing better care and lower costs.


We have been anxiously awaiting an announcement from President Bush about a new health policy agenda: The waiting was over this week when he announced his Innovation Initiative, setting as a goal that most Americans will have electronic medical records within 10 years.

Most industries spend about $8,000 a year per worker on information technology, the president said in announcing the initiative on Tuesday in Baltimore, but the health care industry spends only $1,000 per worker on IT.

The health care industry is simultaneously the most advanced and the most backward technologically. Medical technologies for patient care are dazzling -like computer assisted surgery, molecular diagnostics, and implantable cardio defibrillators.

But anyone who has been to a doctor’s office can see how backward the health care industry is in information technologies: Patient records are kept in walls of paper files, adding huge costs to the system in mistakes and duplicative procedures – and making the information in the files virtually useless for research.

The president’s initiative is important, especially since the government, which pays for almost half of the $1.6 trillion medical bill in the U.S., will provide new incentives to move the health care industry into the information age. To read more: 

The amazing thing is that there is broad bi-partisan support for advancing this agenda. Is it even remotely possible that we could have a non-controversial health policy initiative? Likely so?

Grace-Marie Turner


? Fixing the new Medicare law

? Would Prescription Drug Importation Reduce U.S. Drug Spending?

? Why not import drugs from fantasyland?

? Preventive medicine

? Drug wars

? Physicians report on patient encounters involving direct-to-consumer advertising


Authors: Robert Moffit, Joseph Antos, and Grace-Marie Turner

Source: The Heritage Foundation, 04/26/04

The Heritage Foundation has published the first three papers in a series focusing on how to improve the new Medicare law. In the first paper, Bob Moffit of The Heritage Foundation makes several recommendations, including delaying implementation of the drug entitlement until Congress determines how to pay for it. In the second paper, Joe Antos of the American Enterprise Institute looks at ways to promote real cost containment in Medicare, including accelerating notification of Congress if Medicare’s draw on general revenues grows too large, avoiding automatic spending cuts, and enhancing real competitive reforms. In the third paper, Grace-Marie Turner and Joe Antos recommend ways to build on the temporary drug discount card program, including making a funded drug card a permanent option in Medicare.

Full text of #1:

Full text of #2:

Full text of #3:


Source: Congressional Budget Office, 04/29/04

The Congressional Budget Office concludes in this new study that allowing U.S. citizens to take advantage of lower prices in other countries by legalizing drug importation would produce only small savings. CBO cites its November 2003, analysis of projected savings if drug importation were allowed from “a broad set of industrialized countries.” That study showed that the policy would “reduce total drug spending by $40 billion over 10 years, or by about 1 percent. Permitting importation only from Canada would produce only a negligible reduction in drug spending,” the study concludes.

Full text:


Author: Holman W. Jenkins, Jr.

Source: The Wall Street Journal, 04/28/04

Rather than enact misguided drug importation legislation, “why not just enact our own Canadian-style price controls here?” writes Wall Street Journal columnist Holman Jenkins. “What’s the point of simply sanctifying ad hoc hoops and hurdles that permit a few Canadian Internet pharmacists to get rich by arbitraging between our system and theirs?” Jenkins argues that prescription drugs are now subject to the same misaligned incentives as the rest of the health care system. “Consumers don’t weigh cost vs. benefit; drug companies focus their development efforts on drugs aimed at large populations of price-insensitive, insured patients,” he writes. “At the same time, consumers who don’t have drug insurance and pay out of their own pockets scream bloody murder because drugs seem like a violation of a natural order in which medical care is increasingly perceived as a costless entitlement.”

Full text (subscription required):,,SB108310340789295150,00.html?mod=opinion


Author: Anne Applebaum

Source: The Washington Post, 4/28/04

Columnist Anne Applebaum writes about “difficulties the federal government may soon face as it becomes more involved in creating new vaccines and new drugs to combat bioterrorism.” Because there isn’t a major market for these vaccines, the government currently funds the research and pays for the trials, but doesn’t have a backup plan if the drug does not work. “What there isn’t, and can’t be, without a broader, louder national debate, is another, better model: a partnership between the pharmaceutical industry, say, and the Department of Health and Human Services that improves upon the partnership between the Department of Defense and Lockheed Martin,” writes Applebaum. She suggests providing incentives for industry involvement, “instead of government officials placing bets on particular projects.” To address the very real bioterrorism threat, “we may soon have to get over our objections to a new and cozy relationship between the government agencies that want to buy vaccines and the companies, large and small, that make them.”

Full text:


Source: The Wall Street Journal, 04/26/04

An editorial in The Wall Street Journal reports that this week’s announcement of a merger between France’s pharmaceutical company Sanofi-Synthelabo and Strasbourg-based Aventis “is just the latest sign of the true costs to Europe of decades of stringent price controls on the research-based drug industry.” The French government released a statement saying it would become home to “one of the world’s biggest” pharmaceutical companies, but the Journal warns that “the merger won’t change the long-term outcome, in which France and its European neighbors price themselves out of an industry they once led.” Strict labor-market rules, high taxes, and price controls have led many European drug companies to flee to the United States, which outperforms Europe in new-drug approvals and R&D spending, and now accounts for 62% of the industry’s global profit pool. “As attractive as lower drug prices may seem politically, supporters of reimportation might consider whether they want the U.S. to become France, desperately clinging to the surviving remnants of an industry in decline,” the Journal writes.

Full text (subscription required):,,SB108292632878892784,00.html


Authors: Joel S. Weissman, David Blumenthal, Alvin J. Silk, Michael Newman, Kinga Zapert, Robert Leitman, and Sandra Feibelmann

Source: Health Affairs Web Exclusive, 04/28/04

In a new Health Affairs Web Exclusive, Joel S. Weissman et al report that more physicians now believe that direct-to-consumer advertising (DTCA) has a positive rather than a negative effect on their patients and their practices. “More than 70% felt that DTCA helped educate patients about available treatments; 67% felt that DTCA helped them have better discussions with their patients,” write the authors. Overall, 40% of physicians reported a positive effect of DTCA on their patients and practices, which contradicts an earlier online survey that found only 15% of physicians held positive views towards DTCA. (Thirty percent said it had a negative effect.) “Although providers might have felt threatened when DTCA spending grew rapidly during the late 1990s, perhaps by now they are learning to deal with increasingly active patients who are obtaining health information from a variety of sources, and perhaps developing ways to turn these discussions into positive interactions,” the authors write.

Full text:


How Can Information Technology Improve Health Care Quality?

Alliance for Health Reform and The Commonwealth Fund Briefing

Friday, May 7, 12:15 p.m. to 2 p.m.

Room G-50, Dirksen Senate Office Building

Washington, D.C.

For additional details and registration information, go to:

The Real Obstacles to Treating AIDS, Malaria, and Tuberculosis in Developing Countries

American Enterprise Institute Event

Wednesday, May 12, 2004, 9:00 a.m.-noon

Washington, D.C.

For additional details and registration information, go to:,eventID.813,filter./event_detail.asp.

Health Policy Matters is a weekly newsletter containing commentary on health policy developments, summaries of timely and informative studies and articles on free-market health reform, and notices of upcoming events. It features research and writings by participants in the Health Policy Consensus Group. 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 this newsletter and our organization, please visit our website at

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Elizabeth Lamirand

Editor, Health Policy Matters