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Eminent Domain Urged As Tool to Cut Drug Costs

By Susan Levine
Washington Post Staff Writer
Thursday, March 17, 2005; Page DZ03

As prescription drug costs spiral ever higher for the city and its residents, council member David Catania wants the District to be able to claim by eminent domain the formulas of certain widely used medicines so that they could be manufactured for significant savings.

Catania's radical proposal, which will get its first hearing Tuesday before the health committee that he chairs, would take one of government's traditional powers into very different territory. Instead of invoking eminent domain to seize real property, as is often done when land is needed for a project in the public interest, the city, through the mayor's declaration of a public health emergency, would appropriate the patents for these prescriptions as "intellectual property."

Officials then would contract with generic manufacturers to make the medicines at lower rates for District participants in Medicaid and other publicly subsidized health programs. Catania (I-At Large) pegs the city's likely financial windfall at "tens of millions of dollars annually." But as groundbreaking as the council member believes the legislation to be -- based on an untested position advanced by a West Virginia law professor and an unrelated Florida case -- the pharmaceuticals industry considers it deeply flawed.

"Unwise, unworkable and unconstitutional," said David Remes of Covington and Burling, an expert on patent law and an attorney representing the Pharmaceutical Research and Manufacturers of America.

It would kill companies' financial incentive to research and develop new drugs, Remes contended. Moreover, given the companies' right under eminent-domain law to be compensated for their loss, he said, the bill would not bring about the savings Catania envisions. "It is hard to see how the District realizes any savings."

For Remes, however, the bottom line is a constitutional one. "Congress alone has the power to regulate licenses," he said.

The issue propelling the bill is the skyrocketing expense of brand-name drugs. The country's spending on prescription medicines has more than quadrupled since 1990, according to the Kaiser Family Foundation, and is on track to maintain double-digit increases annually through 2013.

Governments at all levels are struggling to handle the bill, often with little apparent control over pricing. A recent report by the inspector general of the federal Department of Health and Human Services stressed the huge discrepancy in what states paid through their Medicaid programs for 28 various drugs. In one case, the highest-paying state paid nearly 4,100 times as much as the lowest-paying state -- among the "clear evidence of profiteering and price-gouging," Catania said.

Debate over the reimportation of less expensive drugs became part of the 2004 presidential election, even as a growing number of counties and states pondered whether to flout federal regulations and buy directly from Canada.

City leaders last year passed Access Rx, another Catania measure, which requires in part that the District negotiate with drug companies for discounted prices. Certain provisions should begin to be implemented within several months; others face protracted litigation.

Catania acknowledges that his latest effort has "lots of pitfalls," the most probable being industry lawsuits against the District and any generic companies that step up as manufacturers.

Those companies could not begin making these name-brand medicines -- such as the cholesterol-lowering Lipitor or the anti-inflammatory Celebrex -- without approval by the federal Food and Drug Administration, Catania noted. "We're not talking about cooking these pills in our basement."

To Remes and the pharmaceutical industry, Catania's bill is "an unfortunate diversion of public resources to an issue that is flawed at every level."

To Catania, however, enough is enough. "What we're doing here," he said, "is going to bring a lot of scrutiny, and we're opening ourselves to the wrath of the . . . industry. But sooner or later, someone's going to have to stand up."

© 2005 The Washington Post Company