Edward I. Koch
Saturday, Dec. 20, 2003

This new program does not cover all expenses. It requires large payments by the insured before Medicare picks up the balance. Many hoped there would simply be a reasonable co-pay requirement for each prescription drug, but that did not happen. At the insistence of the drug industry, the new legislation prohibits the Medicare Administration from bargaining with prescription drug companies to obtain the lowest possible cost to Medicare, and the ultimate consumer.

The bill passed in the U.S. Senate 54-44 and in the House of Representatives 220-215 after intense arm twisting by the White House. The Bush administration, in pressuring Republican members to vote for it, said that the bill's passage would rob Democrats of a major issue in the 2004 election. The Republican majority supported it, but it was opposed by conservative Republicans who believe the government should not provide any drug coverage.

The bill was opposed by a majority of Democrats, led by Sen. Ted Kennedy, who said that it did not provide sufficient coverage and opened Medicare to competition by private insurance carriers. Every Democrat from New York in both the House and Senate voted against it.

The bill would not have passed but for the support of the American Association of Retired Persons (AARP). AARP's positions on Social Security and Medicare are considered sacrosanct and non-partisan by senior citizens.

David Certner, an AARP spokesperson, admitted during a recent appearance on the Jim Lehrer news program that the bill had a number of flaws. However, AARP supported it because it believed that a limited federal prescription drug program is a good start that could be improved upon over time. While I agree, and had I been in Congress would have voted for the legislation, I would urge immediate action to remedy the deficiencies in the law.

The worst feature of the new law, in my view, is its prohibition against drug purchases from Canada, which guarantees that Americans will continue to pay too much for prescription drugs and far more than our Canadian neighbors purchasing the same American-made drugs. This prohibition applies to drugs made in America and then shipped to Canada, where they are sold at a substantial discount – as high as 65 percent – of their price in the United States, thanks to Canada's price controls on prescription drugs.

Many observers have pointed out that because drug companies charge more for their products in America than they do in Canada, consumers in Canada are able to avoid paying the huge cost of developing new drugs. These costs are paid by U.S. consumers.

The only exceptions to the statute's ban on importing American drugs back from Canada are if the U.S. Food and Drug Administration agrees that it is safe to do so, or provides inspections to assure safety.

I have written to David Certner urging him to spearhead an effort to amend the new law to repeal the ban on importing American drugs back from Canada and to reduce the co-payments required of Medicare beneficiaries. An effort should be made by Americans of all parties and of all ages to persuade the members of Congress to support ARRP's efforts in this regard.

In addition, Americans of all political persuasions should begin a campaign to get Dr. Mark McClellan, commissioner of the U.S. Food and Drug Administration, to create and charge for an inspection service that would permit Canadian companies to export to the U.S. American-manufactured prescription drugs. Those drugs would be examined by the FDA to insure they have not been tampered with and are not counterfeit. The savings to both the U.S. government and the individual purchasing the prescription drugs would be enormous.

The city of Boston and the state of New Hampshire have already announced that they intend to import American drugs from Canada. But they will not be able to do so unless the FDA creates the inspection procedures allowed in the legislation, which it has declined to do. Why? It would appear that the federal agency is submitting to the pressures and demands of the prescription drug companies.

The pharmaceutical industry is intent on maintaining the status quo so that they can continue to over-charge American consumers for life-extending and enhancing drugs. This is unacceptable. Amending the new law should become a priority for both parties in the next election to make it more comprehensive. It is about time that the voice of ordinary Americans is heard on this priority issue.

Edward I. Koch is the former mayor of New York City. His commentary for Bloomberg radio is republished here. You can hear his weekly radio show by clicking here.

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