The Magazine


Jul 5, 1999, Vol. 4, No. 40 • By ROBERT M. GOLDBERG
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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. Dialysis patients on EPO are healthier and live longer than those without it. 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. Under the Medicare protocol, the number of people who died increased and people with healthy blood levels wound up getting sicker. It took five years of lobbying and administrative review to get Medicare to loosen its EPO controls. If the Clinton drug benefit is adopted, it will simply extend Medicare's mishandling of drug benefits to all prescriptions.

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. 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.

Finally, no amount of populist rhetoric alters the fact that the Clinton plan will mainly benefit the well-off. Nearly 50 percent of seniors have family incomes of $ 25,000 or more and spend less than one percent of their income on drugs. Hence the Clinton plan will create an entitlement that will largely go to a group who can afford their drugs and their drug coverage.

Like the Health Security Act of 1994, the Clinton drug plan should be scrapped. It may seem like a panacea. But it is really a poison pill that seniors and non-seniors alike should avoid.

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