Shalala Nixes Canada Drug Sale Plan

Wednesday, December 27th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) â€” A new law aimed at cutting prescription drug prices by allowing them to be reimported from Canada won't be implemented by Health and Human Services Secretary Donna Shalala.

In a letter Tuesday to President Clinton, Shalala said the law had ``serious flaws and loopholes.''

Those concerns ``make it impossible for me to demonstrate that it is safe and cost effective,'' she wrote. ``As such, I cannot sanction the allocation of taxpayer dollars to implement such a system.''

Signed by President Clinton before Election Day, the law was an attempt to address the clamor for cheaper prescription drugs â€” particularly among the elderly. Lawmakers were unable to agree on a more sweeping plan to add prescription drug coverage to Medicare.

Drugs manufactured in the United States can be purchased for much less in Canada, principally because the government regulates prices, a solution fiercely resisted here.

For example, the allergy-sinus medication Flonase Nasal costs $46 in the United States, but just $23 in Canada. Likewise, 45 pills of the anti-depressant Prozac can cost about $106 in the United States and $43 in Canada.

The law was vigorously opposed by the pharmaceutical industry and Democratic critics called it a Band-Aid fix for the country's troubles with prescription drug prices, manufactured to give political cover to those who opposed broader solutions.

Shalala was directed by the legislation to review the law and determine whether it was cost effective and safe. Shalala said she would not request $23 million available to establish a system for overseeing the importation of drugs from Canada.

She argued that the law raises safety issues because there's no guarantee that imported drugs will carry labels approved by the Food and Drug Administration. And she complained that the law did nothing to keep drug manufacturers from strong-arming distributors into raising prices on imported drugs.

But Sen. Byron Dorgan, D-N.D., a co-author of the legislation, said the administration simply ``chickened out.''

``The best approach would have been to say, we'll pass a law that does something and then we will wait and see how the drug companies react,'' Dorgan said. ``If they start playing games then at least we'll all know who the villain is. But this makes no sense at all. Now we know the drug companies will do nothing because we're doing nothing.''

Chris Jennings, Clinton's top health policy aide, said Shalala's stinging assessment was on target.

``We have an obligation not to raise hopes with false promises,'' he said. ``There are loopholes that allow the intent of the legislation to be completely thwarted.''