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Prescription drug law a bitter pill

Measure falls by the wayside now that election is over

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WASHINGTON — Six months ago, Congress enacted a law that was supposed to allow Americans to re-import U.S.-made prescription drugs from countries where they are sold at cheaper prices. But now, it appears the measure was just an elaborate election-year charade.

President Clinton signed it in October, but the Department of Health and Human Services waited until after the election to announce that the legislation was too flawed to implement. Thus Americans with high medicine costs are no better off than they were before.

While Republicans and Democrats blame each other for undermining the legislation, the outcome was precisely what the powerful pharmaceutical industry was seeking when it spent an estimated $40 million to advertise and lobby against re-importation of drugs.

President Bush, who endorsed the re-importation plan during his campaign, has an opportunity to implement it, proponents say. But so far administration officials have not responded to pleas from members of Congress to revive it.

The story of how this law, which was more than two years in the making, ended up being a waste of legislative time and energy demonstrates just how hard it has become for Congress and the president to successfully buck a powerful industry such as drug manufacturers.

The history of the measure also argues against the widely held notion that industries contribute money to politicians to make something happen in Washington. In this case, as in most big legislative showdowns involving business interests, industry executives were seeking to preserve the status quo.

The pharmaceutical industry, which earned more than $27 billion in profits last year, reportedly has as many as 300 lobbyists in Washington. Reports filed with the Federal Election Commission show industry executives contributed more than $26 million to federal candidates in the last election — about one-third to Democrats and two-thirds to Republicans.

Even enthusiastic proponents of drug re-importation acknowledge it would be an imperfect solution to the problem of high prescription drug prices in the United States. But two years ago, a bipartisan group of lawmakers seized on re-importation as the only feasible way — short of outright price controls — to force the drug manufacturers to sell their products at the same price in the United States as they do overseas.

At the time, members of Congress were acutely aware that seniors living in states bordering Canada and Mexico were buying their drugs more cheaply by driving across the border.

Congress' motivation for enacting re-importation legislation was particularly strong in an election year. At stake were the votes of seniors, who rely more heavily on high-priced medicines.

In an internal memo, House Republican leaders were afraid that Democrats had succeeded in convincing most voters that the GOP was closely allied with the pharmaceutical industry.

In other words, as Congress took up the re-importation issue, Republicans were trying to demonstrate their independence from pharmaceutical companies and Democrats were trying to portray them as being tucked neatly into the industry's pocket.

The partisan battle was engaged last summer after the House voted 370-12 and the Senate voted 74-21 for differing versions of the re-importation legislation. It quickly became apparent that it was going to be difficult for a conference committee to resolve the differences. Complaints about loopholes

At that point, Speaker Dennis Hastert, R-Ill., brought the conferees interested in importation together to find a compromise. Republican conferees then accepted language suggested by Hastert that Democrats saw as part of an intentional effort to weaken the re-importation legislation. House Democrats, working closely with the Clinton White House, argued that the GOP-imposed compromise had two glaring loopholes:

— It would have permitted the drug companies to charge higher prices to foreign wholesalers who intended to ship their U.S. products to pharmacies in the United States.

) It required that re-imported drugs sold in the United States have government-approved labeling. This would have been impossible because drugs sold overseas have different labels and sometimes even different names.

Republicans, meanwhile, argued that the Democrats were only imagining these loopholes. They insisted obstacles to enforcement could be overcome because the measure gave the head of the Department of Health and Human Services wide latitude to alter the procedures to make the law work.

But the administration and House Democrats withdrew their support after the committee voted along party lines to reject amendments to close the alleged loopholes. On Sept. 25, President Clinton sent a letter to Congress saying he opposed it, even though it was part of a measure he intended to sign into law.

Democrats charged that the Republican leadership had intentionally rendered the legislation unenforceable at the bidding of the pharmaceutical industry. When the conference committee met to consider the final provision, the room was full of drug company lobbyists, those who attended said.

Although the White House was on record opposing the measure, Health and Human Services Secretary Donna Shalala waited until January to let it be known that she did not intend to implement it.

But Republicans have a chance to push for implementation. In a Jan. 31 letter to President Bush, proponents, mostly Republicans, asked him to keep his campaign promise to implement the law.

"Not only will this lead to fairer drug prices for Americans," they wrote, "but this issue also gives us the opportunity to demonstrate that we can work together on a bipartisan basis to solve problems."