548 THE LANCET

NEWS

Washington Perspective

The Clintons target the pharmaceuticalindustry

The neatest trick in politics is to pick a whipping boy whodefies sympathy. En route to health-care reform, Mr andMrs Clinton have found theirs in the pharmaceuticalindustry, conspicuously accusing it of heartless pricegouging. Wall Street saw this coming when Clinton led thepolls last summer, and since then drug shares have declinedby about 17%.During the Reagan and Bush administrations, the

profiteering charges were frequently made by Democraticmembers of Congress. However, these presidents saw noopprobrium in making money. The Clintons, with a keensense for popular economic grievance, regard the matterdifferently. Under most health-insurance plans, consumerspay for prescriptions out of pocket. And prescription costshave indeed been rising, at two to three times the rate ofinflation in recent years, and even more, according to thereckoning of some critics of the industry. Since prescriptiondrugs account for only 7% or so of American health-carespending, even if all drugs were distributed gratis, thenational health bill would still be a crusher. However, drugcosts are a particularly heavy burden on chronically illretired persons on fixed incomes. Dispensing pharmacistsdefend themselves against customers’ complaints bydenouncing the manufacturers. Doctors may be revered,despite high prices, but affection for a pharmaceuticalcorporation is rare.The President has accused vaccine manufacturers of

"shocking" prices and "unconscionable" profits at the

expense of poor children’s health. The manufacturers

respond that low immunisation rates are not caused by thecosts of vaccines, though they concede prices have risen, butby fragmented care systems that confuse and neglect thepoor. Both causes are obviously at work. Mrs Clinton, nowensconced in public esteem as the President’s principaldeputy on health reform, has reiterated the charges ofgouging. And the presidential couple have gone beyond thevaccine issue to accuse the industry of profiteering across theboard. Attacking the industry’s longstanding contentionthat robust profits underwrite research, the President notedthat its spending on research runs second to marketing andadvertising. "Meanwhile, its profits are rising at four timesthe rate of the average Fortune 500 company", he said,adding, "Compared to other countries, our prices are

shocking".The industry has responded meekly, though it is

represented in Washington by one of the capital’s mostpotent and well-financed lobbying organisations, thePharmaceutical Manufacturers Association. Comprisingsome 120 research-oriented firms, the PMA, according to

publicly available tax records, paid its president, Gerald J.Mossinghoff, an annual salary of$379 619.23 in 1990.

Avoiding an open clash with the White House,Mossinghoff has taken the line that the industry has alreadyrestrained its price increases-up by 5-7% last year,

compared with 9-4% in 1991, he emphasises, thoughinflation last year was only 3 %. And he has indicated that theindustry is willing to adopt voluntary price controls.

So far, the only company to respond directly to theClintons’ attacks is Merck & Co, whose chairman and chiefexecutive officer, P. Roy Vagelos, published an open letter tothe President as an advertisement in five major newspaperson Feb 19. Vagelos noted that his company had committeditself to hold price increases to the rate of inflation, andadvised the President that "We need a search for truth, notscapegoats".For Vagelos, there was a painful irony in the President’s

blanket attacks on the pharmaceutical industry. Last

September, at the height of the election campaign, BillClinton received Vagelos’ endorsement at Merck

headquarters in New Jersey. Using the occasion for a majoraddress on health-care policy and cost containment, Clintonobserved that "Over the past 12 years, prescription drugshave increased at three times the rate of inflation". He thenwent on to praise Merck’s cost restraints, noting that "notevery company in this country has been as responsible as thisone is in the runaway costs, not of new experimentaldrugs-I think the market should pay what is appropriate tocover all research and development costs of bringing thosedrugs to market, and they are enormous-but for regulardrugs".

In prior encounters with critics of its pricing behaviour,the pharmaceutical industry, individually and collectively,has not favoured the temperate response. The maindifference now, of course, is a President who is warning ofloss of tax benefits and other penalties if the industry doesnot hold down its prices. But also hovering on the flanks andeager to move against the industry are several influentialmembers of Congress, including Clinton’s fellow Arkansan,Senator David Pryor, chairman of the Special Committeeon Aging. A recent report by the committee’s staff, Earninga Failing Grade: A Report on 1992 Drug Manufacturer PriceInflation, presented a barrage of darnning statistics on

pharmaceutical prices and profits—depicted as excessive, byany measure. And it also disputed the industry’s claims ofrecent restraints on price increases.Coming soon, too, is a long-awaited report from the

Congressional Office of Technology Assessment on thefinancing of pharmaceutical research. Drug development isa horrendously expensive gamble, the industry routinelyinsists, and high profits are indispensable for financingresearch. The OTA study is tightly held, but personsassociated with its preparation tell me that it expressesserious doubts about the link between high profits anduseful pharmaceutical products.

Daniel S. Greenberg

549THE LANCET

Round the World

India: Curbs on private medical colleges

By banning admissions to medical colleges cloaked as"management quotas", the Supreme Court has striven tocheck the growing commercialisation and corruption thatdogs medical education in this country. The judgment, fromthe constitutional bench, was delivered in Unnikrishnan JPand others vs the State of Andhra Pradesh and others, inwhich a ruling had been sought on a range of issues related to"capitation fees", the amount over and above the admissionfees to medical colleges set by the state. In upholding thatprivate colleges may be allowed to charge higher admissionfees than government institutions, the court was moderatingits own judgment delivered last year in Mohini Jain vs thestate of Karnataka, when Justice Kuldip Singh ruled thatcapitation fees were illegal even when they were termedhigher education fees.

Centre stage in the controversies are the proliferation ofprivate medical colleges and the corruption associated withthe commercialisation of medical education operating byway of the capitation fees, which run into hundreds ofthousands of rupees (R100 =2.30), and which enablestudents to be admitted on criteria other than merit. Parents

usually expect to recover the sums through the child’ssubsequent private practice or as dowries. Private medicaleducation became synonymous with huge profits, mainly inAndhra Pradesh, Maharashtra, Kamataka, and Tamilnadu.Last September, the then Chief Minister of Andhra Pradeshlost his office after the state’s high court struck down thestate Government’s order sanctioning 20 new medical anddental colleges and imposed strictures against the ministerfor the favours he granted. India has 107 government and 35private medical colleges; of these, 30, mainly from theprivate sector, are not recognised by the Government.The proliferation of private medical schools and the

rampant corruption forced the President to issue twoordinances last August, which made approval of the Medicaland Dental Councils of India a requirement for the settingup of medical and dental colleges, respectively. However,says Dr K. S. Chugh of the Post Graduate Institute ofMedical Education and Research in Chandigarh and amember of the Medical Council of India (MCI), "Justbefore the MCI inspection, they create all the facilities.

Suddenly after the inspection everything disappears ...This is well on the records of the Medical Council of India".His denouncement of commercialisation of medicaleducation and the poor standards has also been expressed bythe medical profession. India has a doctor to population ratioof 1:2500, although 1:3500 is recommended. Health

planners point out that, if practitioners of systems other thanallopathy are taken into account, the country will have a ratioof 1:500. Overproduction of doctors means unemploymentand brain drain.The recent Supreme Court judgment held that only a

registered society or public trust will be permitted to set upand run a medical college. Existing private colleges have 6months to comply. Also, from the academic year 1993-94,the total and the increase in number of places will be fixed bythe appropriate authority. Half the places will be "free" (ie,with fees on par with those at government institutions) andwill be allocated by the Government or the University.Admission fees higher than those at government institutions

can be charged for the other half; the court is leaving theactual sum to be set by the appropriate authority (eg, theState or professional body). Eligibility for either type ofplace is to be based on a common entrance examination, andthere will be no management quotas or other special groups.In view of the open provisions, checking commercialisationremains a daunting task.

Sanjay Kumar

Egypt: Control of professional organisationsConfrontation between the Egyptian Medical Association

(EMA) and the Government came to a head last week whenthe Association called for a token one hour nationwide striketo protest against new legislation aimed at curbing its power.Throughout the week doctors have occupied the EMAbuilding to show solidarity with their association, which hasbeen spearheading campaigns to thwart government effortsto control the working of professional groups that now havepro-Islamic leaders. In December the EMA started legalaction against the Interior Minister for alleging that it hadbeen "infiltrated" by agents and was in receipt of foreignfunds (see Lancet Dec 19/26, p 1532). On Feb 17, after astormy parliamentary debate, during which the Parliamentbuilding was besieged by angry professionals, theGovernment rushed new legislation through.

According to the new law, the election of an association’spresident and the executive committee shall be valid only ifmore than 50% of the registered members cast their votes.Otherwise the running of the Association will be handedover, for 6 months, to a senior judge of the Cairo Appealcourt, who will be assisted by four other judges or

magistrates and four members of the association who werenot candidates at the election. The rules will also apply toprovincial associations, where less senior judges will takecharge. After the 6 months a fresh election will be held, withthe same rules applying.The EMA is also concerned about article 7 of the new

legislation, which states that voting is a professional duty,that those who do not vote and do not give an acceptablereason will have to pay a fine in the form of additional

subscription dues, and that these doctors will be allowed tocast their votes again only when their fines have been paid infull at least 24 h before polling day. The new legislation alsoprohibits the professional associations from receivingdonations or gifts to be used for purposes other than thoseenshrined in their constitution. EMA leaders say that this

prohibition will inhibit their health-care activities in

deprived areas. After the Cairo earthquake last autumn theEMA set up clinics and dispensaries giving free service tovictims. Free or subsidised medical care has now beenextended to other poor districts.The EMA has dispatched senior committee members to

various countries to lobby for international medical support.In London this week Dr Essam El Erian, the association’sassistant general secretary, appealed to British doctors forhelp. Egypt, he said, is viewed by Governments in the Westas a symbol of freedom in the Middle East but theGovernment is now trampling on fundamental rights andinhibiting democratic principles. He pointed out that noteven elections to the Egyptian Parliament require over 50%voting.The Government would argue that Islamic

fundamentalists are taking advantage of the low rate of