Editorial: Disclosure might cut drug costs

Monday, June 17, 2002 | 10:21 a.m.

Now that prescription drug legislation is stalled in Congress because of competing plans with no compromise in sight, state governments are the ones beginning to make it a priority. Their interest in this issue is because of Medicaid, a health program for low-income people whose costs are divided between the federal and state governments. Prescription drug costs are covered under Medicaid, which means the higher the costs the more states have to pay out of their budgets. So far in fiscal year 2001-2002, which ends June 30, drug companies billed Nevada's Medicaid system $69 million. The state's share of that is half, or $34.5 million. As Nevada searches for ways to keep the cost of prescription drugs under control, it should review what took place last week in Vermont.

Gov. Howard Dean, a medical doctor, signed a bill requiring that drug companies disclose all gifts to doctors valued higher than $25. State governments, and consumers too, have been catching on lately to the fact that many drug companies lavish doctors with expensive gifts. The alleged return for the drug companies is more prescriptions for their brands, even though less expensive remedies might be available.

Interestingly, Vermont's law does not prohibit the gifts. It simply requires disclosure. The theory is that drug companies in Vermont will now be more inclined to obey the ethics of their own trade association, which state that while gifts for education are OK, gifts for entertainment are not. This means that doctors will still be able to receive free samples of drugs -- which many doctors give away to patients who would have trouble paying for them -- and they will still be able to receive payments for their time during necessary forums in which they share information with drug companies.

Our guess is that ostentatious freebies, however, such as trips and dinners, will become a thing of the past for doctors in Vermont. It could be the start of real reform. The 2003 Nevada Legislature should consider passing a similar disclosure bill.