March 9, 2004, New York Times

Medicare Nominee Backs Drug Imports

By ROBERT PEAR

WASHINGTON, March 8 — President Bush's nominee to run Medicare and Medicaid, Dr. Mark B. McClellan, said Monday that he would work with Congress on bipartisan legislation to assure the safety of prescription drugs imported from Canada.

The way to do that is by giving the Food and Drug Administration more money, more personnel and more power to police imports, Dr. McClellan said at his confirmation hearing before the Senate Finance Committee.

"I absolutely am committed to doing that," so Americans can safely import lower-cost medicines, he said.

As commissioner of food and drugs for the last 16 months, Dr. McClellan has led the Bush administration's campaign to stop unauthorized drug imports. He has said such products endanger American consumers because they are often counterfeit, mislabeled or contaminated.

Under intense questioning by several senators, Dr. McClellan appeared to soften his tone a bit on Monday. His stance took account of two political realities. Several senators have threatened to hold up his nomination if he resists drug imports. In addition, drug prices and proposals to import drugs from Canada are emerging as an issue in the presidential campaign.

Senator John Kerry of Massachusetts, the likely Democratic presidential nominee, has said he wants to "allow individuals, pharmacists, wholesalers and distributors to import F.D.A.-approved prescription drugs from other countries at lower prices." He has also said, "The only reason George Bush has opposed this approach is that the drug industry would lose billions in profits."

On Tuesday, Senator Kerry plans to join Illinois's governor, Rod R. Blagojevich, in discussing the issue with Medicare beneficiaries in Evanston, Ill. Mr. Blagojevich, a Democrat, recently encouraged an Illinois couple to file suit to overturn the federal ban on importing drugs from Canada.

Senate Republican leaders said they hoped the Senate would confirm Dr. McClellan this week. If confirmed, he would become administrator of the Centers for Medicare and Medicaid Services, which provides health benefits to more than 70 million people who are elderly or disabled or have low incomes.

Dr. McClellan defended the new law that offers drug coverage to Medicare beneficiaries and gives private insurers a large new role in the program.

But he had no immediate answer when Senator Bob Graham, Democrat of Florida, asked why the administration had assumed that increased enrollment in private plans would drive up Medicare costs rather than save money.

"There are a lot of steps we can take to bring down costs and increase competition," said Dr. McClellan, who is a physician and an economist.

President Bush and Congressional Republicans had hoped to reap political dividends from the law providing drug benefits to the elderly, but many Republicans find themselves on the defensive. Democrats have kept up a barrage of criticism, saying the law helps drug and insurance companies more than the elderly, and polls suggest that many of the elderly are not aware of the new law.

Senator Olympia J. Snowe, Republican of Maine, told Dr. McClellan she had grown weary of hearing reasons the federal government could not allow drug imports from Canada.

"We need to hear a can-do approach," Ms. Snowe said, noting that both houses of Congress had signaled support for allowing drug wholesalers and pharmacists to import drugs under strict safety standards. "What is it going to take to move this forward?" she asked.

One step, Dr. McClellan said, would be to restrict "the scope and type of drugs that can be imported."

AARP, the lobby for older Americans, called on drug companies on Monday to limit price increases. In letters to 16 major drug manufacturers, William D. Novelli, chief executive of AARP, said prices for existing drugs should not rise faster than the Consumer Price Index, which is the basis for annual increases in Social Security benefits.

Mr. Novelli said manufacturers should also "constrain the prices of new drugs" and should use their influence to "curtail greater markups throughout the distribution chain" to retail pharmacies.

John C. Rother, policy director of AARP, said the organization had begun to monitor price changes for about 200 commonly prescribed drugs and would periodically report its findings to the public.

In response to other questions, Dr. McClellan said he would not take any steps that undermined the False Claims Act, a federal law that rewards people who report fraud in government programs like Medicare and Medicaid.

He also said that he would not approve any state Medicaid experiments that imposed firm limits on federal spending or eliminated the guarantee of specific benefits for poor people.

"Caps on spending are not envisioned as part of the structure" of Medicaid, Dr. McClellan said, and "the individual entitlement cannot be waived."


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