Not a Solution to State Budget Problems

Not a Solution to State Budget Problems
January 1, 2004



Sen. Steve Rauschenberger spoke at the National Symposium on Drug Importation, held in Chicago on October 23, 2003. Rauschenberger has represented Illinois’ 22nd Senate District since 1992 and currently serves as Assistant Minority Leader. He received his bachelor’s degree in business administration from the College of William & Mary. His presentation has been edited for length.


I am not a policy expert. What I’m about to say is based on my impressions as a policy maker who has spent 11 years on the Illinois Senate Appropriations Committee. I’ve specialized in Medicaid funding, and have had the opportunity to work on pharmaceutical acquisition issues for the state of Illinois intensively for eight years. But, I certainly don’t have the economics background of the other panelists you’re going to hear.



Not a Real Solution

What we’re embarked on in Illinois is no real solution to a problem we really do need to talk about. Illinois’ challenge, our budget challenge, does not revolve around pharmaceutical issues. It revolves around stewardship and our revenue streams. It is so easy and dangerous for governors and politicians in general to politicize things and take the easy path and argue that the solutions to their problems are somehow vested in multimillion-dollar companies that are obeying the law.

Illinois has the country’s most comprehensive senior and low-income support system for people who need access to pharmaceuticals. To argue that access is a problem in the state of Illinois is to argue that it must be an even worse problem in other states. We have acted aggressively in the General Assembly over the last four years to make sure that means-tested programs are in place for seniors up to household incomes in excess of $25,000 based on net tax earnings. So, there are programs in place to make sure pharmaceuticals are available and stay accessible.

Governors and other elected officials who argue that importing Canadian price controls into our market-driven system is in either the short-term best interest or the long-term best interest of Illinois consumers or federal and state governments are wrong. And I think people have to stand up and talk about that.



Impact on Research and Development

We have a system in the United States that is the safest in the world. Safety and certainty and efficacy have always been the hallmark of the FDA’s approach to the whole pharmaceutical industry. We force drug companies to spend hundreds of millions of dollars researching and jurying the products they want to bring to market, both for their effectiveness and their safety. To argue that we ought to use arbitrary price controls established by other countries as a basis for establishing-- essentially, through market mechanisms--pricing in the United States is to walk away from our commitment to protecting the intellectual property that’s been discovered by the pharmaceutical companies.

If we’re satisfied that we have now discovered every compound we want, we have solved every health problem that we’re willing to work on, we can just simply expropriate the intellectual property of drug companies and end the whole idea of research. If you won’t pay people to do research, to do testing, to do evaluation and to do discoveries, don’t expect them in a market-based economy to be willing to engage in that.

As European countries and the Canadians have imposed price controls on the prices of pharmaceuticals in their countries, less and less research is done anywhere but in the United States. The latest numbers I’ve seen show that well over 80 percent of all the pharmaceutical inventions and breakthroughs in the last 10 years have taken place in the United States, mostly by companies seeking to find a compound that does something they can sell for a profit in the marketplace.

It’s important that drugs be affordable, but it’s also important to have that next generation of drugs. If we’re not willing to be committed to that, we really are doing our children a massive disservice. I think we ought to face up to that. The governor of the state of Illinois and other public officials apparently are willing to risk the investment that the pharmaceutical industry makes in research and development in some kind of short-term stampede to hide their budgetary problems under the blanket of lower pharmaceutical prices.


Real Solutions

There are real solutions available to Americans for the issues concerning prescription drugs, and I think those ought to be the focus of discussion. We need fundamental court reform in the United States. The class-action lawsuits and the tort system drive up costs for all large manufacturers, in particular people making sensitive and groundbreaking innovative products. We have the most expensive tort system in the world.

We need to talk about speed-to-market reforms. We need to take a look at what part of FDA testing really is efficacious and makes sense and which part slows our speed to market. We need to have that done, though, by researchers who aren’t being politically pressured. Some drugs obviously should be moved to market faster if they’re lifesaving and the risks are worth shortening the process. Other countries bring pharmaceutical inventions to market faster and we need to see if they’ve discovered some shortcuts that would reduce the unnecessary costs we have imposed on our pharmaceutical research companies.

We need to be honest about taking a look at utilization review. We have people in the Medicaid system who are now receiving seven, eight, nine, and 10 prescriptions each month. In some cases that may be entirely appropriate, but it ought to also be entirely appropriate to make sure a practitioner who understands the interactions of pharmaceuticals is looking at that cocktail mix of pharmaceuticals they’re taking to make sure we don’t have two or three medical providers prescribing conflicting drug regimes. So governments, like our state, that want to lower spending ought to be taking a hard look at the utilization review.

We, in state and federal government, need to take a look at means-tested support. We need to make sure pharmaceuticals are accessible to people in the United States who have problems affording them. We need to stay committed to that. And we need better regulation of our wholesale market. We need to make sure people purchasing drugs for use in hospice- and nursing-home care are not reselling those drugs in the marketplace and putting the safety of that system at risk.

And we need a more fundamental effort at generic awareness. Much of the individual consumer’s drug bills can be affected if they take a hard look at generic alternatives. Those are real solutions to a real problem that do not undercut our opportunity to have future innovations.

Most of all, we have to encourage consumers to be responsible about their health care. There is no quick fix on the Web. If the drug’s not prescribed, you ought not to be ordering it. We ought not to encourage people to self-medicate. We’re seeing more and more abuses of that. There are people on the Internet willing to prey on Americans’ desire to find the pill that solves all their problems. And that’s fundamentally a flaw we have in our society.