This Is Your Party on Drugs

About three years ago, pollster Celinda Lake sat down with then-Representative Debbie Stabenow -- a Michigan Democrat preparing to run for the Senate -- to put together a campaign proposal for prescription drugs. Stabenow had already made headlines busing senior citizens across the border to buy affordable prescription drugs in Canada; she wanted to make high drug prices the focus of her campaign against Republican Spencer Abraham, a leading ally of the pharmaceutical industry. Lake's polling showed that people resented high drug prices enough that they were ready, even eager, for a plan that would tackle the issue head-on. "Why aren't we for price controls?" Stabenow wondered. "That's what everybody wants."

Everyone, that is, except the Democratic leadership, who thought campaigning on price control was too risky. Instead, Stabenow, like Democrats across the country, spent the summer and fall of 2000 campaigning on the details: co-pay percentages, premiums, and low-income subsidies. And like Democrats across the country, Stabenow discovered that when her opponent began to talk about his co-pay percentages, premiums, and low-income subsidies, voters could barely tell the two plans apart. Although she would later win a narrow 1-point victory, Stabenow's advantage on prescription drugs never recovered. Nationally, what should have been the Democrats' most potent issue ended up as a wash.

It didn't have to be. And it doesn't have to be today, either. Two years after the 2000 elections, with Stabenow heading up the Senate Democrats' prescription-drug task force and congressional Democrats preparing for a slate of tough fall campaigns, the party is still divided over how to win on the drug issue -- and still behind the tide of public opinion. How the Democrats resolve their differences may well make the difference between winning and losing in November. "The message has to be simple and easily understandable," says Chuck Loveless, political director for the American Federation of State, County and Municipal Employees. "And there has to be a clean line in the sand."

On the merits, there's no doubt that price is the defining issue. Drug expenditures in the United States have doubled since 1993, and seniors now spend more on pills than on their doctor's bills. That's why the grandmother choosing between her groceries and her blood-pressure medication has become a staple of today's debate. But thanks to the sky-high cost of prescription drugs, no serious plan to provide a meaningful fraction of seniors with prescription coverage will be affordable without an effort to reduce the price of drugs.

Until now, however, price has been the third rail of the prescription-drug debate. Nobody wants to touch it. Why? Because it's the one issue on which the pharmaceutical industry has refused to budge. Drug companies have long argued that the high price of drugs simply reflected the cost of private research and development. No matter what the proposal -- from closing the patent loopholes that have allowed drug companies to fend off cheaper generics, to granting Medicare the power to bargain directly with drug companies for lower prices -- the industry has opposed it. Any effort to reduce prices, the industry has warned, and it would be forced to cut back on "R&D" -- stifling innovation and hurting people in the long run.

Republicans have long lent a sympathetic ear to this argument. (In turn, they've received the bulk of the industry's contributions since 1990.) But many Democrats have also listened. Some are New Democrats who oppose price control on ideological grounds; others, such as New Jersey's Rush Holt and California's Anna Eshoo, represent districts packed with biotech companies. (Notably, most Democratic recipients of industry money are New Democrats.) Largely due to New Democrat opposition, the Democrats' proposals have never touched price. But without any provisions to contain cost, proposals for coverage became prohibitively expensive -- thus ensuring the opposition of fiscally conservative Blue Dog Democrats.

The result, in 2000, was a Democratic plan that scrupulously avoided cost containment and was not much more generous than the Republican plan. On one key point -- what percentage of annual drug costs the plans would cover -- the two proposals sounded identical: Each offered about 50 percent (although on a very different range of out-of-pocket costs). And the single clear distinction between the two parties -- Democrats generally preferred to provide the benefit through Medicare, while Republicans proposed outsourcing it to private insurance companies -- proved amenable to Republican spin. "The Republicans can [still] say, åWe have a Medicare benefit,'" says Public Citizen's Frank Clemente. "The Democratic proposals just never resonated with the public."

That's why the prescription-drug proposals the party unveiled in mid-June are significant. For the first time ever, House Democrats have drafted a bill that goes after price. Their proposal authorizes the Secretary of Health and Human Services to use the purchasing power of Medicare's 40 million beneficiaries to bargain directly with drug companies -- just as HHS Secretary Tommy Thompson did to obtain cheap Cipro last year. And bargaining power is just one of the contrasts the Democratic bill offers to the bill taking shape in House Republican caucus meetings. The GOP House proposal actually provides no guarantee of coverage; its "standard" benefits are simply suggestions to the private insurance companies charged with delivering the benefit. The Senate Democratic bill, meanwhile, is more modest than the one in the House, offering less generous benefits and relying on generic drugs to bring down costs. But given that the Senate plan actually needs to garner 51 votes and fit into a budget resolution, it's still an improvement over 2000.

The mere fact that the House Democrats have crossed the Rubicon on price controls bodes well for the party's general direction on prescription drugs -- and the shift has everything to do with public opinion. According to polling Lake conducted this spring, public support for tackling prices is overwhelming. The most sensible policy, Medicare bargaining, polled positively at a startling 88 percent, with 60 percent calling it a "very good" idea. But even a more radical program -- flat-out government price controls -- polled at 81 percent, with 55 percent strong support. Granted, these are soft numbers. But it seems clear that public opinion is still ahead of the Democrats.

"Essentially, the public would be comfortable with the actual government imposition of prices," argues Jeff Blum of USAction. "That's not going to happen; we're not particularly arguing for that. But it just shows that the public can be unbelievably volatile."

One thing that seems to be driving these poll numbers is a rising tide of public disgust with drug companies. The pharmaceutical industry posted above-average profits during last year's recession, even as drug prices continued to spiral upward; both facts are well-known to an increasingly attentive voting public. A spate of bad press -- stories about how the industry employs more lobbyists than there are members of Congress, for instance, or about exorbitant pay for the industry's CEOs -- hasn't helped. But there's also a growing body of evidence that undercuts the drug industry's argument that price controls would stifle innovation. The industry cited $802 million as the cost of bringing a new drug to market in 2001. But last year, Public Citizen calculated the number at around $240 million. What's more, according to a report by Families USA, eight of the nine companies that make the 50 best-selling drugs for seniors spent more than twice as much on advertising and marketing as on research and development. The public sees the advertising every day and intuitively grasps the contradiction.

Add to that the industry's assiduous efforts to derail low-priced generics by extending patents on popular drugs, and the drug companies begin to seem less like engines of innovation than unscrupulous robber barons. "The thing that is different -- the gestalt -- is that people have come to distrust the drug industry," argues Clemente. "Rather than people looking at it as a life-giving industry, they've begun to look at it as a price-gouging industry."

It'd be hard to find a softer target -- and more political legroom -- than this on any issue. So can the Democrats win on prescription drugs? The party talks a good game, much as it did in 2000. But even with public opinion solidly behind them, it's not clear whether all the Democrats are ready to take an aggressive line. The House Democratic leadership has risked the embarrassing possibility that New Democrats will actually vote against the "official" Democratic plan. In the Senate, intensive negotiations failed to convince Georgia's Zell Miller -- who's already huffily denounced the idea of using prescription drugs as a campaign issue -- to accept a more aggressive plan.

To win in November, Democrats need to be comfortable both embracing a tough line against the pharmaceutical industry and defending their plan against bogus Republican attacks on "socialist medicine." The risk is worth it. Senior voters will constitute nearly a third of the electorate this fall, and are worried about drug prices and happy to have the government "play policeman," as Lake put it to me. The GOP, says one Democratic strategist, "won't even approach" the notion of government bargaining power.

On the off chance the Democrats can manage to force a vote on their House plan, dozens of Republican incumbents -- many in senior-heavy swing districts -- may be forced to hand their opponents useful material for campaign ads. And even if the Democratic plan never comes to a vote, the advantage of taking on price, as the House plan does, is that it gives voters and Democratic candidates an easy shorthand for distinguishing between their plan and "the drug industry's plan." That's crucial for getting voters to distinguish between the two parties in November -- and for preventing a repeat of 2000's muddle. "If we can make them choose between what voters want and the industry wants," points out one senior House staffer, "this issue is a winner for us. The trick now is to hold them accountable for their plan."