GWEN IFILL: We look first tonight at this week's decision by the Clinton administration to stop a plan to import low-cost drugs. The Republican-sponsored provision would have allowed wholesalers and pharmacists to import prescription drugs back into the United States. Some of those drugs are made in this country but are often sold at lower, government-regulated prices elsewhere. The plan, killed yesterday by Health and Human Services Secretary Donna Shalala, was signed only reluctantly by President Clinton in late October. This afternoon Mr. Clinton had this reaction to the secretary's decision:
PRESIDENT CLINTON: I said when I signed the law that it was deeply flawed. She is required by law to make a determination that - two things - one, that the reimportation would not weaken the safety standards that we have for Americans and their pharmaceuticals; I think she could do that. But the second was she had to make a determination by law that this would lower prices for American consumers. And the - the law was so different from the one we proposed, and is so full of loopholes, that she could not say that she believed that the prices for consumers would go down, which is exactly what I wanted when I asked them not to do this. So what we'd like to see is a law that protects safety that will lower consumer prices. I do think that people ought to be able to do this. And I did before, but I will again - as soon as the Congress comes back - I'll send them a statement of the things that I believe would meet the standard of the law.
GWEN IFILL: For more on the administration's decision we are joined by Representative JO Ann Emerson, a Republican from Missouri, who supported the reimportation plan, and Ron Pollack, executive director of Families USA, a consumer health advocacy group; he opposed it. Ron Pollack, this sounds like a no-brainer, cheaper drugs for people who need them, cheaper prescription drugs. What is wrong with an idea like this?
RON POLLACK: I don't think that the idea itself is a problem. In fact, for any member of Congress who sees their constituents traveling to Canada or Mexico getting prescription drugs at a fraction of the price that we get here, obviously members of Congress want to get that thing solved. So it isn't the general concept of allowing drugs to be reimported. The problem that Secretary Shalala talked about in her letter to the president was that there were loopholes in this legislation which made it appear like more was being promised than actually would be delivered.
In effect, what she said was that the drug companies can dictate to those who reimport drugs what the prices should be for individuals when they purchase these drugs. She also said that the labels that are necessary in order to allow reimportation could be withheld from the drug companies and, as a result, this whole process would have been a nullity.
Now, she was clear, she said that the problems that she uncovered with her examination of this, that they can be corrected and presumably what the president was talking about in the clip you just showed, is that he is going to make some suggestions to the Congress so that these problems, these defects which she discussed, they can be changed and with leadership like from Congresswoman Emerson I think we will get some changes and hopefully then we can do something more effective.
GWEN IFILL: Well, Congresswoman Emerson, you worked very hard on a piece of legislation which now you hear Ron Pollack and Donna Shalala say is riddled with loopholes.
REP. JO ANN EMERSON: Well, first of all let me say it was a very bipartisan effort… 18 months or so as we were trying to put the bill together and let me also say, Gwen, and also to you, Ron, that it was never our intent for this to be a substitute for a large prescription drug benefit from within the Medicare system. But first you've got to deal with the price issue, and then deal with the issue of distribution through the Medicare system, because we didn't want to break the bank obviously. As we put this bill together, it was after the Senate put their bill together -- Senator Jeffords and Senator Dorgan and others in a very bipartisan way. The president actually sent a letter as you might have read today in The New York Times -- he sent a letter saying send me this bill, send me this bill, and we put together what we thought was a tighter bill in the House dealing with some of the issues that Secretary Shalala specifically mentioned. Number one, the whole issue of certification, and whether or not we could make sure that the drugs would be safe, et cetera. And we thought we had made that language even better than the Senate version. Well, obviously, the secretary doesn't think that.
GWEN IFILL: So you are saying that the administration cooperated with you all along on this bill and pulled out the rug from under --
REP. JO ANN EMERSON: Yes, up until I would say -- throughout the entire process, we were talking on a very bipartisan basis with the administration, the entire time. And that is what is so puzzling about this whole incident, particularly because you know, when the president and Secretary Shalala also mentioned the labeling issue, we specifically have language in the bill that deals with the issue of labeling. It's probably not as strong as some of us would have wanted to have --
GWEN IFILL: Now explain to people who don't know the issue inside and out what the labeling issue is.
REP. JO ANN EMERSON: Well, in other words, when you -- we want to be sure that when a drug is reimported back into the United States, let's say it's Prilosec, they use it for gas and that sort of thing. We are bringing Prilosec back. Sometimes it will be under its chemical name as opposed to the Prilosec name and the drug manufacturers would have to label that so that you would know you were getting the same drug because we want to make sure there was no question that it was the same drug approved at the same FDA facility. And consequently, the language that we put in the bill we thought was fairly strong and the secretary has discretion in her regulatory abilities to force the pharmaceutical companies to put those labels on there.
GWEN IFILL: She chose not to do that.
REP. JO ANN EMERSON: Well, it appears that is what she chose to do and for some reason decided that our language was too loose. Quite frankly, we gave her all the authority necessary to do just that.
GWEN IFILL: Would this plan have set out -- would it accomplish what it set out to do -- that is -- affect a lot of people's lives who require cheaper prescription drugs?
REP. JO ANN EMERSON: Well, it was our intent to be able to level the playing field so that the American consumer wasn't having to subsidize consumers in Europe and in Canada, for example, even in Mexico, and that we could pass along some of those lower costs to the consumer.
GWEN IFILL: Ron Pollack, would that intent have been gained? Would they have been able to do that?
RON POLLACK: I think some people would have gotten some benefit out of this. But it's very important not to oversell this piece of legislation. Let's remember that the amount of drugs that can get reimported say from Canada are fairly limited. After all, the drug companies are not going to send to Canada, which has one-tenth of the population of the United States, the drugs needed for America's consumers so they can get these drugs at a cheaper price.
So even without the flaws that Secretary Shalala cited in her letter, which actually those flaws occurred in the latest stages of the legislation when the pharmaceutical companies sought some changes, but even without them only a small fraction of the American consumer would have gotten a benefit. Now I think it's a valuable benefit, and I think it's important -- the concept is important. But Congresswoman Emerson I think stated correctly that it's really important to develop much more lasting and significant change that truly can bring prices down, and that includes making sure that senior citizens who participate in the Medicare program that currently does not provide prescription drug coverage can do so. And that has two benefits. One is it makes sure that all seniors will get the drug coverage that they need but secondly, it would make sure that the marketing clout, the bargaining clout that the Medicare program would bring on behalf of its 39 million beneficiaries could be used to get prices down.
GWEN IFILL: You are talking about a prescription drug Medicare plan that had no political weight or at least ability to get enacted in Congress this year. This is something that could get enacted. What is wrong with the baby step?
RON POLLACK: I always believe that if you can get something done that is helpful, you might as well do it. And I think what we are going to see is that some of the problems with this legislation will probably get corrected. But it's very important for your viewers not to feel that most of us are going to see lesser prices as a result of it. Only a small fraction of people will gain the benefit of this. And we need something much more far reaching that improvements in the Medicare program can bring about.
GWEN IFILL: Congresswoman.
REP. JO ANN EMERSON: Well, I don't disagree totally with you, Ron, although I will say that I think more people would be able to receive a benefit from this legislation and from this law than a tiny fraction, but I want to also reiterate a point that this is only, Gwen, a first step. And we have to deal first with the pricing issue and then secondly with the overall program. But there has got to be more competition in the marketplace for prescription drug costs. I mean, you know, my mother-in-law is paying an outrageous amount of money in a very rural area where there is no competition and this legislation basically our goal was to open up the marketplace.
GWEN IFILL: You see this as fostering competition. And the pharmaceutical industry sees it as backdoor price controls.
REP. JO ANN EMERSON: Well, that is their prerogative. We see this as a necessity to at least begin to be able to decrease the cost of drugs. I mean, if you ask any insurance carrier, anybody, what is the highest increase you have had in any item with regard to your insurance policy they'll say it's prescription drugs; they are skyrocketing -- 16 percent cost increases. I know Ron and I agree on this. And we have got to start somewhere so it was our goal of course just to make this be the first step to allow people to go to Canada and to other places and legally bring back prescriptions but also to allow many of the pharmacists and wholesalers who wished to access those markets and pass along a lower cost prescription drug to do so. And today they are not allowed to do that.
GWEN IFILL: What about safety concerns? Once it leaves country how do you keep track of those drugs…
REP. JO ANN EMERSON: Well, I mean, there is a chain of custody in there. It's fairly lengthy -- the process that they must go through and the testing they must go through in our legislation. And I know that that, you know, some will say that is a concern because it costs money to set up a system to do that. On the other hand, if in fact, you know, you are purchasing drugs at a third of the cost that you are paying here, even if there is a tiny increase for the testing, you still have the opportunity for lower costs but we are not saying that, you know, we can't say you are going to definitely get this cost and definitely going to get that cost.
RON POLLACK: Gwen, when Congresswoman Emerson was asked about price controls, we actually have price controls today but it's controlled by the pharmaceutical industry. They, in effect, get a monopoly through a patent that lasts 17 years, sometimes longer, and they are the only ones who determine what the prices are. We don't have in our market system any kind of competition so that we can moderate prices. And so as a result, the sky is the limit. And the drug companies actually are spending considerably more money for marketing and advertising and administration than they are for research and development. And their profit margins are higher than any industry in the Fortune 500.
GWEN IFILL: You suggested today and the president did as well, that this can go back to Congress and something can still be worked out. How realistic is that?
RON POLLACK: I think that -- I think that there is a likelihood that Congress will go back and correct this. The flaws that were cited by Secretary Shalala are eminently fixable. And I think that Congress is likely to do it. My hope is that Congress will go beyond that and really look to solutions which I think are going to be more effective. This is a first step. It's a small first step. But my hope is that Congress before it finishes its work in two years really will take a significant step so that all seniors and all Americans indeed get some relief.
GWEN IFILL: You were up there in the mix, Congresswoman. What is the chance that Congress will be able to figure this out?
REP. JO ANN EMERSON: It will be my first priority on the Agriculture Appropriations Subcommittee once again. And we have a good core bipartisan group -- and if we could ever work together in that kind of bipartisan spirit, I think that the opportunity is there and you know, I think that this could be tweaked a little bit. Certainly the money is there. We've already appropriated it for at least the first year and it would be my hope that with what Ron said is that this really though is only going to be the first step. And we still have to deal with the entire issue of the tremendously high outrageous costs of prescription drugs.
GWEN IFILL: Congresswoman Emerson and Mr. Pollack. Thank you both very much.