By Dan Morgan
Washington Post Staff Writer
Wednesday, July 28, 1999; Page A4

The star of television ads sponsored by the newly formed, industry-backed coalition, called "Citizens for Medicare Reform," is a silver-haired senior citizen called Flo, member of a women's bowling group. She says firmly: "I don't want big government in my medicine cabinet."

The campaign represents the first unified response by drugmakers to President Clinton's June 29 proposal to have the federal government cover half the pharmacy costs of Medicare beneficiaries up to a set limit.

The companies – which were singled out for attack by the Clinton administration during the 1993-94 health care debate – do not want to find themselves in the position of openly opposing popular prescription drug proposals. But they are wary that such plans could eventually lead the government to impose cost-containment measures, such as price controls and rationing, and warn against cutting into profits that finance research on new pharmaceuticals.

Citizens for Medicare Reform is neither supporting nor opposing the measures now on the table, according to executive director Tim Ryan. Ryan said the group supports special assistance for low-income elderly and strengthening and improving Medicare, but also wants to protect the elderly from what he termed a "one-size-fits-all government-managed program" and to keep the federal government out of doctors' decisions on which drugs to prescribe.

Ryan, formerly marketing director for the Pharmaceutical Research and Manufacturers of America (PhRMA), which represents major drugmakers, credited PhRMA with playing the lead role in establishing the coalition. He declined to reveal the budget of Citizens for Better Medicare, but some sources said it had a war chest of more than $20 million.

Describing the "Flo" advertising spot, which will air in the Washington area, Ryan said: "We think she resonates. You need to break through the clutter and we think Flo does that."

Members of Citizens for Better Medicare include the National Association of Manufacturers, U.S. Chamber of Commerce, and a number of organizations that want pharmaceutical companies to develop new medicines to fight specific illnesses, such as kidney cancer, Alzheimer's disease, tuberous sclerosis and AIDs.

But officials at the nation's largest group representing the elderly, AARP, were more skeptical of the industry's motivations. "They [the manufacturers] are a little more subtle about it now, but fundamentally their position is still the status quo," said Martin Corry, AARP's director of federal affairs. "There's no evidence that they've really changed."

The tax bill passed by the House last week contained language supporting a tax deduction for Medicare beneficiaries who buy prescription drug coverage. But the tax break would take effect only if drugs for Medicare patients were provided through comprehensive health plans.

Democrats charge that the tax break would only help more affluent Medicare beneficiaries, and, in any case, would not expand coverage to the extent needed.

No similar tax provision was in the bill approved last week by the Senate Finance Committee, but one could be proposed today when the Senate takes up the measure.

"This is one of the most important reforms in our lifetime," said PhRMA official Alixe Glen Mattingly. "But if we do it the wrong way it could be catastrophic."