Drugmakers back in spotlight as U.S. reform amps up

Pharmaceutical companies defended themselves on Tuesday against complaints of rising drug prices that could re-establish the drug industry as a political target in the U.S. health reform debate.

An early deal with Democrats had largely shielded the $315 billion industry, but recent reports from Wall Street and consumer groups that drug prices have risen nearly 10 percent this year brought the companies under a harsh spotlight.

“These reports do not reflect the way that the prescription drug market functions and therefore exaggerate prescription drug price trends,” Richard Smith, senior vice president of policy at the Pharmaceutical Research and Manufacturers of America (PhRMA), told lawmakers in testimony prepared for a House Energy and Commerce health panel.

At the same time, the industry braced for a bipartisan push in the Senate to allow the importation of cheaper medicines from Canada and other countries as part of the larger health reform legislation.

Some market analysts have forecast higher U.S. drug sales as companies seek to squeeze earnings from dozens of widely used medications before they hit the so-called “patent cliff” and face cheaper rivals. Generic versions of drugs such as Pfizer Inc’s blockbuster cholesterol drug Lipitor and others could cost the industry billions of dollars.

But such price increases come amid an already-contentious debate over how to overhaul the nation’s healthcare system and has some critics crying foul.

Democrats and consumer groups charge the pharmaceutical industry is profiteering ahead of anticipated reforms that could reduce industry profits through larger government rebates from the drugmakers, as well as other concessions.

The AARP, which represents about 40 million older Americans, released a report in November about the rising prices that prompted Democrats in both the House and Senate to seek outside investigations.

Bonnie Cramer, head of AARP’s board of directors, said high prices can lead to patients of all ages skipping much- needed therapies.

“Many consumers report that they have not filled prescriptions, skipped doses, or cut pills in half,” Cramer, whose group lends its name to some healthcare policies and backs Democrat’s health reform plans, said in written testimony for the House hearing.

“RE-IMPORTATION”

In the Senate, where drugmakers brokered a deal months ago to finance $80 billion over 10 years for health reform efforts, a bipartisan group of lawmakers is seeking to allow U.S.-licensed pharmacies and wholesalers to import medications from overseas.

The pharmaceutical industry—one of the few health industries to back Democrats’ health overhaul plans and certainly the one with most financial leverage—has been fighting importation for years.

The amendment could be taken up by the Senate as early as later Tuesday and would allow medications approved by the U.S. Food and Drug Administration from Canada, Europe, Australia, New Zealand and Japan.

Critics say even FDA-approved drugs cannot be deemed safe when they are imported. Supporters, including AARP, say importing drugs, or “re-importation,” offers consumers safe, cheaper alternatives.

The move signals some risks for pharmaceutical companies as Congress’ health reform legislation moves beyond the committee that arranged the original 10-year deal.

Senate Finance Committee Chairman Max Baucus, whose committee helped broker the deal, said last week drugmakers may end up paying more when the chamber’s version of the bill is finally passed.

Some Wall Street analysts have pointed to potential $100 billion final price tag for drugmakers, who so far say they expect their share to remain in the same $80 billion ballpark.

Democrats are pushing to a vote on a final Senate bill by the end of the month. The measure would then have to be consolidated with the already-passed House bill before President Barack Obama could sign it into law.

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By Susan Heavey

WASHINGTON (Reuters)