01:00 AM EST on Thursday, January 13, 2005

DAYTON, Ohio

OVER THE HOLIDAYS, three news stories -- two related, one not -- showed the need for new thinking on the prescription-drug issue.

The first story concerned the release of the U.S. Department of Health and Human Services' long-awaited report on drug reimportation into the United States.

Prescription-drug prices in America continue to rise at three times the rate of inflation, with Americans paying 30 to 70 percent more for drugs than consumers in virtually every other country. Senior citizens from northern states regularly charter buses or drive their cars across the Canadian border to buy affordably priced prescriptions, while growing numbers of citizens living elsewhere in our country are either priced out of the drug market or forced to choose between buying food or medication.

It's no wonder that many politicians and consumer advocates are pushing hard for the reimportation of cheaper prescription drugs.

To almost no one's surprise, the Health and Human Services' report -- finally released, safely after the election -- concluded that drug reimportation was not a viable solution. In essence, the administration's position seems to be that Americans must continue paying more for drugs than everybody else, and should stop complaining about it.

Although critics have denounced the report and continue to press for reimportation, a second news story cast serious doubt on whether reimportation is, indeed, a long-term solution.

In late November, Canada's health minister said that his country -- with a population only one-tenth that of the United States -- cannot be America's drugstore and still take care of its own citizens. If wholesale drug reimportation were legalized in the United States, Canada's supply of life-saving medications could be depleted in a matter of days. It's hard to argue with him.

Leaders here must continue to try to overcome the obstacles to drug reimportation. But it is even more important to find a realistic, long-term solution to the scourge of skyrocketing drug prices.

The issue is simple: Drugs are cheaper in other countries because those governments negotiate prices on behalf of their citizens. Drug companies in this country oppose such negotiations because they fear it would lead to smaller profits.

Fortunately, a model exists for fixing the problem.

In 2003, Ohio faced catastrophe, with drug costs exploding and nearly 2.2 million people (20 percent of the population) without prescription-drug insurance. Negotiations between the pharmaceutical industry (PhRMA) and a coalition of labor, church and consumer organizations (led by the Ohio AFL-CIO) resulted in "Ohio's Best Rx," a first-in-the-nation program that will slash drug prices for uninsured Ohio residents of any age who earn less than $22,450 per year, and uninsured Ohio families that bring home less than $44,000 per year.

Ohio's Best Rx program, which begins this week, enables these Ohioans to buy drugs for the same average price paid by state employees and retirees, plus an additional $4 in fees ($3 to cover the pharmacy's professional services and a $1 transaction fee, to cover the program's administrative costs).

The potential benefit is enormous. Today, for example, a 30-day supply of the cholesterol-lowering drug Lipitor costs uninsured Ohioans up to $130. But if the state pays an average price of, say, $70, Ohio's Best Rx participants would pay just $74 -- a discount of more than 40 percent. A mail-order option will provide even greater saving.

What's more, these deep discounts are achieved without a big new bureaucracy. The program won't cost taxpayers a dime.

The program could be extended nationally, but doing so would require drug companies to slightly trim their profits, at least initially. That's where the third news story comes in.

As we've watched the unfolding of the tsunami disaster in the Indian Ocean, who among us has not recognized the moral obligation to help ease the suffering? The suffering of those in America who can't afford life-saving medications may not be front-page news, but it is no less stark.

We realize that drug companies are not charities. But by making Ohio's Best Rx the model for a national plan, focused on the uninsured, the companies would not only generate goodwill; they might even eventually increase their profits. Whatever profits are initially sacrificed because of lower prices could well be made up or even exceeded through increased volume from millions of new customers suddenly able to afford needed medications.

Extending Ohio's Best Rx program nationally would surely make an enormous difference in the lives of our fellow citizens. All we need now is for someone to lead the way.

Teresa Heinz is chairwoman of the Heinz Family Philanthropies and wife of former Democratic presidential candidate John F. Kerry. Jeffrey R. Lewis, president of the Heinz Family Philanthropies, helped in the negotiations that led to Ohio's Best Rx program; he may be reached at jlewis [at] heinzoffice.org.