[Media-watch] Medicare VNRs "Covert Propaganda": Bush administration violated US law - GAO announcment - 20/04/2004

[Julie-ann Davies]

http://releases.usnewswire.com/GetRelease.asp?id=168-05202004

'Covert Propaganda' From Bush Administration Violates Federal Law Says FTCR;
What Else They're Not Telling About New Medicare Rx Plan

5/20/2004 5:37:00 PM


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To: National Desk

Contact: Jerry Flanagan, 415-633-1320

SAN FRANCISCO, May 20 /U.S. Newswire/ -- The non-partisan General Accounting
Office (GAO) announced that the Bush Administration had violated federal law
by failing to disclose the source of recent advertising about the new
Medicare prescription drug law. The GAO also raised serious concerns over
"notable omissions and weakness" in the materials and failures to disclose
limitations in the law, according to the Foundation for Taxpayer and
Consumer Rights which is urging television and radio stations to counter the
false advertising by disclosing three key facts about the law that could
impact a senior's decision to enroll.

"President Bush shouldn't have to use covert propaganda to sell a program
that is supposed to be good for seniors. The Bush Administration has
resorted to misleading the public about the new Medicare law to cover-up
dramatic give-aways to their drug company boosters," said Jerry Flanagan of
the Foundation for Taxpayer and Consumer Rights (FTCR). "Not only are they
not telling the truth, the Bush administration has launched a scare-tactics
campaign funded by pharmacists to discourage reimporting cheaper drugs from
Canada."

The advertisements consisted of written materials and video segments
distributed to news networks throughout the country. The televisions
segments featured actors posing as news anchors reporting on the benefits of
the new Medicare prescription drug law. The GAO found that the Bush
administration had violated federal law by not disclosing that the fake news
segments were paid for by government agencies using taxpayer dollars.

According to the Center for Responsive Politics, pharmaceutical companies
contributed $27 million in individual, PAC and soft money contributions to
Congress in the 2002 election cycle -- 75 percent to Republicans. In 2004,
drug companies have contributed $7 million to national officeholders -- 66
percent to Republicans.

The GAO's decision is available at:

http://www.gao.gov/decisions/appro/302710.pdf

A GAO letter to congressional officials citing the misleading nature of the
advertisements is available at:

http://www.gao.gov/decisions/appro/302504.pdf

To counter the Bush Administration's misleading advertisements, FTCR urged
television and radio networks to publicize three major limitations of the
law:

-- Drug prices, availability and program enrollment fees are not guaranteed
by the Medicare Prescription Drug Benefit Card program to begin in June. As
a result, prices and drug availability can change every month while
enrollees have to commit to enroll for a year.

-- The Medicare prescription drug law specifically bans the federal
government from negotiating bulk discounts on drugs even though the U.S.
Department of Veterans Affairs saves 50 percent and more off the list price
of drugs it purchases for veterans as a result of bulk purchasing.
Therefore, a larger share of the $400 million earmarked over the next ten
years for the Medicare drug program will pay for overpriced drugs and drug
company profits.

-- The Medicare prescription drug law continues the ban on reimporting
cheaper U.S. made drugs from Canada. As a result, seniors will not be able
to take advantage of U.S. made drugs sold to Canada at 30 to 60 percent bulk
discounts.

The Bush Administration's Department of Health and Human Services (HHS) and
Food and Drug Administration (FDA) have launched a national campaign with
the Association of Boards of Pharmacy (NABP) to discourage the reimportation
of drugs from Canada.

"The U.S. needs affordable drugs because seniors must often choose between
buying their medications and paying for rent and food. It is absolutely
absurd for the FDA and the Bush Administration to claim that it is
categorically unsafe to reimport U.S. made drugs," said Jerry Flanagan of
the Foundation for Taxpayer and Consumer Rights. "Instead of addressing the
problem of high cost prescriptions and assuring the safety of imported
drugs, the FDA and the Bush Administration are using scare tactics to deter
seniors. Meanwhile, consumers are paying for the obscenely high profits and
bloated administrative costs of the Bush Administration's top campaign
contributors."

According to Fortune 500 Magazine, the pharmaceutical industry has
consistently been the most profitable industry over the past eight years,
with profits four to five times higher that of the average Fortune 500 firm.

The pharmacists and Bush Administration officials say drug importation is
unsafe despite the fact that more than 40 percent of prescription drugs on
the world market are produced by FDA approved facilities.

Each of the FDA's and pharmacists concerns fail to hold up under scrutiny,
according to FTCR:

-- Quality Assurance

The FDA says that it cannot assure the quality of imported drugs even though
it is currently in the process of approving pharmaceutical production
facilities in 25 countries, including Canada, South America, Australia and
Israel.

A recent Minnesota survey found four of eight surveyed pharmacies could
easily meet or exceeded state safety standards.

Despite the promising results, Peter Pitts of the FDA said the survey,
"calls to the public's attention that these are very dangerous gray zones
and that you can't really trade some savings for safety."

Kevin Goodno, the Minnesota Human Services commissioner, called the FDA's
comments "an overstatement, and a fair amount of rhetoric is involved."

"We have no evidence at this time, in the context of Internet pharmacies,
that there are unsafe products going to the United States," said Diane
Gorman, assistant deputy minister of Health Canada.

(Source: Associated Press, February 13, 2004 -- Frederic J. Frommer)

-- Generics

The FDA says that consumers should buy generics instead of purchasing from
Canadian pharmacies. However, a loophole in the federal Drug Price
Competition and Patent Term Restoration Act (the Hatch-Waxman Act) allows
pharmaceutical companies to delay approval of generic alternatives. Under
the law, pharmaceutical companies can file a patent infringement lawsuit
against a generic company for any reason and automatically receive a
30-month stay on generic production while the case is litigated.

These stays provide brand name manufactures an additional 2 years of market
exclusivity which generate sales that far outweigh litigation costs.

-- Research and Development (R&D)

Pharmaceutical companies claim that if they sold drugs in the U.S. at the
same prices they offer in Canada and other countries there would not be
enough revenue to provide for research and development costs of new drugs.

However, a 2000 report found that pharmaceutical companies had overstated
their R&D costs by as much as 5 times actual costs. Data also shows that up
to half of the R&D costs for some of the most expensive drugs (cancer and
AIDS treatments) are paid for with taxpayer dollars.

Though drug companies often blame high research and development (R&D) costs
as the driving force behind double-digit annual increases in drug
expenditures, the fact is that pharmaceutical industry spends two to three
times more on advertising and marketing the newest drugs than they do on
research and development.

-- Counterfeit drugs

Counterfeit drugs have been a problem in the U.S. for years. There is no
indication that importing drugs from abroad or reimporting drugs from Canada
with minimal safe guards in place would add significantly to this problem.
In fact, lower cost drugs in the U.S. market would actually lower the
incentive for counterfeiters to produce unsafe drugs.

Additional safety checks could easily be paid for with money saved by
purchasing lower costs drugs.

-- Untested Substances

U.S. and international drug companies commonly apply for approval for use in
U.S. and Canadian markets simultaneously.

For example, Targeted Genetics Corporation (TGEN) was granted regulatory
approval to begin its rheumatoid arthritis (RA) phase I clinical trial by
the U.S. Food and Drug Administration and it's Canadian equivalent, Health
Canada.

There is no evidence that the Health Canada approval process faces conflict
of interest problems that could impact the fair and accurate approval of
drugs at a greater incidence than the FDA in the U.S.

The Foundation for Taxpayer and Consumer Rights (FTCR) is a non-profit and
non-partisan consumer advocacy organization. For more information visit the
website at http://www.CalHealthConsensus.org


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