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Medicare reform: Price fixing proves system flawed

BY THE MICHIGAN DAILY

Published March 14, 2001

Imagine that you found out the prescription drugs you had been buying for $377 actually cost $11.36 to produce. Further, imagine that this 2,000 percent price increase had not been isolated to one area but had taken place nationwide. Sounds absurd, doesn"t it? Well, until a few days ago, that"s exactly what Mylan Laboratories had been doing to unsuspecting consumers across the country. Fortunately, the Federal Trade Commission and attorneys general in all 50 states accused Mylan Laboratories of fixing the price of lorazepam and clorazepate, according to recent Associated Press reports. According to Michigan Attorney General Jennifer Granholm, nearly a million people in Michigan alone use lorazepam and clorazepate.

Lorazepam is used to treat anxiety, tension and insomnia and is often prescribed for nursing home patients and those with cancer and AIDS. Clorazepate is used to treat anxiety and hypertension.

The Mylan Laboratories case is especially alarming because the company is a generic drug maker. The market forces, which are generally supposed to regulate prices in favor of the consumer, were unable to prevent Mylan from acquiring enough power to fix prices for generic drugs for millions of consumers nationwide and they almost got away with it.

More importantly, the lawsuit raises the larger issue of overly expensive prescription drugs with the public. Inaction towards the needs of millions of Americans, many of them elderly, is inexcusable. When Mylan Labs fixed prices for these drugs it did not just ignore consumers" rights, it exploited a basic need of patients.

The issue was discussed by almost every presidential candidate in the recent election and since the new administration took power, it has been urging bipartisan support of Medicare reform. Congressional leaders of both parties have criticized the White House"s proposed "stopgap" plan however, which would allot $48 billion over the next four years through states to low-income seniors. Although the plan would be a temporary fix, it has brought Medicare back to the forefront of the political arena.

For many Americans, living without prescription drugs is simply not a choice. Neither is the amount they must pay for them.

Although the state attorneys general and the officials at the Federal Trade Commission deserve to be congratulated for busting Mylan Labs, enforcement of the current laws is not enough to fully address the prescription drug problem. In addition to maintaining support for these regulations, the federal government needs to take more proactive measures to increase accountability of drug companies and help more patients afford their medications.

In a recent joint address to Congress, President George W. Bush noted that 99 percent of employer-provided health plans provided prescription drug coverage, while Medicare did not.

This is unacceptable. Congressional leaders, as well as the President, should continue to consider options to revise the Medicare framework and develop a long-term solution. Bush"s stopgap plan is, at best, a band-aid solution. Rather than resorting to a quick fix, Congress must mobilize its resources quickly to revamp the system.