POISON PILL

...Robert M. Goldberg is senior research fellow at the Ethics an^ Public Policy Center in Washington, D.C...

...But the high-quality, innovative medicine Americans now take for granted would be endangered...

...But somehow the administration keeps a straight face when it proposes controlling most of the pharmaceutical market and says that such a plan won't hurt biomedical innovation...

...When you consider that Medicare now reimburses for prescription drugs for hospitalized seniors, that, moreover, most seniors already have private drug coverage, and that a government survey shows fewer than 2 percent of seniors say they have trouble getting the drugs they need, it's preposterous to think that a new prescription-drug subsidy will lower health-care costs...

...Similarly, older Americans barely avail themselves of the flu and pneumonia shots that are already covered by Medicare...

...For just pennies a day, it can lower your chances of a heart attack, yet over 25 percent of seniors fail to take the drug, even after a heart attack...

...It took five years of lobbying and administrative review to get Medicare to loosen its EPO controls...

...What's changed is that the White House is even less forthright about the true cost and character of its health-care scheme than it was five years ago...

...Nearly 50 percent of seniors have family incomes of $25,000 or more and spend less than one percent of their income on drugs...

...If the White House were to propose federal control of 60 percent of the telecommunications or high-technology sectors of the economy, the idea would rightly be rejected outright because it would kill innovation...

...Consider one of the most cost-effective drugs there is—aspirin...

...There are further perversities that would flow from price controls...

...the government, it says, just wants the same discount drug companies now give to health-maintenance organizations (HMOs...

...Like that earlier plan, Clinton's promise to pay for the prescription drugs of older Americans will put health care for millions more people under the control of the federal government—in this case, the prescriptions of nearly 40 million Medicare recipients...

...The federal government would then be the largest purchaser of prescription drugs in the world, and it could indeed force drug companies to lower their prices...

...Even with an additional premium proposed by Clinton—as low as $10 a month—the program would hardly be self-financing...

...it's hard to see how...

...Seniors would likely be forced to use only the drugs the government wanted them to have...

...There is, for instance, the sadly instructive saga of erythropoietin (EPO), a biotechnology product used to reduce the anemia that people suffer when they go through kidney dialysis...

...Well, yes, companies in a free economy make money...

...Dialysis patients on EPO are healthier and live longer than those without it...

...Like the Health Security Act of 1994, the Clinton drug plan should be scrapped...

...For one thing, a universal drug benefit would encourage the nearly 70 percent of retirees who already have private coverage for prescription drugs to drop it in favor of the new federal entitlement...

...Covering the 30 percent who don't already have such coverage would add another $10 billion or so...

...Negotiations with the government over prices could delay the access of seniors to most innovative medicines for years or—if the government blacklists a company that refuses to budge—forever...

...This alone would add about $20 billion a year to Medicare spending...

...But it is really a poison pill that seniors and non-seniors alike should avoid...

...It may seem like a panacea...

...In 1993, in an effort to contain the cost of EPO, Medicare did three things: It put a price control on the drug, rationed the amount patients could get, and refused to reimburse its use for patients above a certain level of healthy blood cells...

...That's why the White House claims that increased subsidy of drugs would lead to lower overall healthcare costs...

...The potentially harmful outcomes of such rationing can be seen with drugs that Medicare already covers...

...Under the Medicare protocol, the number of people who died increased and people with healthy blood levels wound up getting sicker...

...POISON PILL by Robert M. Goldberg AS THE WHITE HOUSE GEARS UP to promote Bill Clinton's universal prescription-drug benefit for the elderly, it seems to have learned a thing or two from its historic health-care defeat of 1994...

...And if they are in an industry that depends on new and improved products for profits, they reinvest a lot of what they make...

...It's true drugs can be cost-effective, but only within the context of a well-coordinated effort to manage disease...

...There is also the phenomenon Duke economist Henry Grabowski calls the social drug lag—thanks to price caps, seniors would be last in receiving access to new medications...

...Hence the Clinton plan will create an entitlement that will largely go to a group who can afford their drugs and their drug coverage...

...If the Clinton drug benefit is adopted, it will simply extend Medicare's mishandling of drug benefits to all prescriptions...

...Now, the White House claims talk of price controls is propaganda from the pharmaceutical companies...

...Finally, no amount of populist rhetoric alters the fact that the Clinton plan will mainly benefit the well-off...

...Democratic populists in Congress and the White House like to rail about the profits of drug companies...

...While the Clinton White House brags that private firms would administer the drug benefit, the list of drugs available—as well as how and when—would be dictated by Medicare bureaucrats...

...Price controls, of course...

...So how will this new entitlement be paid for...

...And like the earlier plan, the Clinton drug benefit promises better care for less money, but will inevitably end up with rationing and price controls that will degrade the quality of care available to the elderly...

...And no one mistakes Medicare for well-coordinated health care...

...But this, too, is exceedingly unlikely...

...The White House is mindful of the fact that Medicare is going bankrupt, so it claims that the new drug benefit would pay for itself...

...That sounds reasonable until you realize that HMOs don't control anything like the 60 percent of all prescriptions written that the government would pay for under the Clinton plan...