An Open Letter to America's Pharmaceutical CEOs
By U.S. Congressman Sherrod Brown (D-OH)
September 20, 1999

Well, you've outdone yourself.

When a majority of Americans believe Congress should establish a prescription drug benefit for Medicare beneficiaries and buy your products, you protest because you're afraid you wouldn't be paid enough. When some members of Congress propose that senior citizens get the same price discounts that large, profitable HMOs enjoy, you buy very expensive television advertisements and accuse government of meddling in your medicine cabinet. And when a few members of Congress suggest we bring some good old-fashioned American competition into the monopoly drug pricing system, you spend millions lobbying Congress and threatening to stifle the development of new drugs if we take that step.

You have repeatedly told the American people -- who pay significantly higher prices for drugs than any other nation in the world -- that any reduction in prices will cause you to drastically curtail your research.

Frankly, it's difficult for some of us to take your threats seriously.

For one thing, even before we pay the enormous drug prices you charge us, you're getting plenty of help with your research and development expenses from the American taxpayer. Congress -- where your multi-million dollar lobbying operation has such great influence -- has granted you enormous tax breaks for research and development. The National Institutes of Health, with an annual budget of $15 billion, does a lot of research for you without charge. You take the information, patent it, and market another new and very lucrative miracle drug.

And let's look at your profitability. Last year, your industry made $22 billion, 5 percent more than any other industry in America.

And I hear your compensation and stock options are pretty good too. A woman in Elyria, Ohio, told me she spends $350 on prescription drugs every month out of her social security check of $808. It takes 5,134 senior citizens like her to pay your typical CEO salary every year.

Plus, you apparently have enough left over after R&D to funnel tens of millions of dollars into direct-to-consumer advertising for blockbuster drugs like Viagra.

So help me understand: Taxpayers fund much of the basic research that produces new drugs. You are granted generous tax subsidies for your own research. You charge outrageous prices to taxpayers to buy your drugs. You tell taxpayers you can't do any more research if your prices drop to the same levels as citizens in every other country in the world pay. You devote huge amounts to promote lifestyle drugs. And you earn windfall profits.

It's becoming increasingly difficult for you to convince the American people that prices can't come down to more reasonable levels without bankrupting you.

You certainly have not missed an opportunity to tell your side of the story -- I give you credit for that. Your lobbying efforts are extraordinarily effective, as good or better than those of National Rifle Association and the managed care industry. You give lots of money at campaign time to people who sit on all the right committees in Congress. You back organizations that purport to express the views of patients and researchers, but actually just parrot your views. You know how to work the system.

But Congress also hears from constituents who take on part time jobs to pay for one drug and who cut their dosage in half so it will last twice as long.

Despite your well oiled lobbying machine, despite your scare tactics, something will be done to bring down the cost of prescription drugs. It's just a matter of what.

Here is one solution. Trust me, you're not going to like it.

I will introduce a bill this week that would permit competitors to enter the market for drugs that are unreasonably priced, whether the drug's patent has expired or not. The patent holder would receive royalties for being the first on the market, and Americans would receive a price break fueled by competition. The bill would also require drug companies to publicly disclose audited financial information justifying the prices they charge.

The goal of these two provisions is simple: force the drug industry to pay attention to the havoc you are wreaking on the lives of women like my friend in Elyria. If drug prices are where they need to be, prove it to us. Explain why royalties paid by competing companies would be insufficient to fund the portion of research and development you actually pay for. Explain why investing in consumer advertising for a product ostensibly chosen by doctors, not consumers, is more important than investing in research and development. Explain why prescription drug prices in the United States are almost twice as high as those in Canada.

Please. Just tell us.

Sherrod Brown, a Democrat from Ohio, is the ranking member of the House Commerce Health and Environment Subcommittee

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H.R.2927 SPONSOR: Rep Brown, Sherrod (introduced 09/23/99)

COSPONSORS(9):

Rep Berry, Marion - 09/23/99 Rep Stark, Fortney Pete - 09/23/99 Rep Allen, Thomas H. - 09/23/99 Rep Schakowsky, Janice D. - 09/23/99 Rep Sanders, Bernard - 09/23/99 Rep Kucinich, Dennis J. - 09/23/99 Rep Strickland, Ted - 09/23/99 Rep Barrett, Thomas M. - 09/23/99 Rep Wynn, Albert Russell - 09/23/99

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