Rx COSTS: Seniors’ Costs Quadruple Inflation Rate

A new study released yesterday by Families USA reveals that wholesale prices for the 50 drugs most commonly used by seniors skyrocketed 6.6% last year -- four times the rate of inflation -- while the drugs' manufacturers enjoyed a median net profit of 20% -- 4.5 times larger than the average net profit for all Fortune 500 companies, the AP/Philadelphia Inquirer reports. House Democrats pounced on the news, accusing "Republicans of protecting profits for the powerful pharmaceutical industry" (Pugh, 11/4). House Minority Leader Richard Gephardt (D-MO) said at a press conference yesterday, "This report explains the real urgency behind our call for a prescription drug plan for American seniors. ... We can't wait to act. We can't afford to stick our heads in the sand like the Republican leadership." He and other Democrats, along with President Clinton, have "stepped up their calls" in recent weeks for a Medicare prescription drug benefit, but Republicans said they will not consider the issue until next year (MacDonald, Hartford Courant, 11/4). "Jockeying for the moral and political high ground" in the debate, Democrats have used that position to portray GOP leaders as "out-of-touch with the needs of most Americans" (AP/Philadelphia Inquirer, 11/4).

The Details
Between 1994 and 1999, prices for the 50 top senior drugs jumped 25.2%, almost double the 12.8% inflation rate for that period, according to the study, which measured changes in cost of a year's supply of each drug at common dosages. "As these price increases occur, more and more seniors are being priced out of the prescriptions they need to maintain their health and their lives," said Ron Pollack, executive director of the not-for-profit consumer health advocacy group Families USA (Love, AP/Annapolis Capital, 11/3). The steepest price hikes listed in "Hard to Swallow: Rising Drug Prices for America's Seniors" affected the following drugs:

Lanoxin: A congestive heart disease drug, Lanoxin is the most-prescribed medicine for seniors, who have endured a more than 87% increase in its cost over five years, and a 15% jump last year alone.
Lorazepam: Cost for this Parkinson's disease treatment soared by 279% last year and 385% over the past five years -- 30 times the inflation rate. Costing only $97 for a year's supply in 1994, the drug now runs about $469 per year.
Imdur: The seventh most-prescribed drug for seniors, prices for the angina medicine increased ten times since 1994, costing $237 per year then and $525 per year now, a jump of 111%.
Atrovent: Between 1994 and 1999, prices for the respiratory illness drug have risen over 37%, from $382 per year to $546 per year.

"Pharmaceutical companies are raising drug prices on the backs of America's seniors, and these vital medicines are increasingly unaffordable for Americans," Pollack said. He noted that seniors must fill an average of 18 prescriptions per year, but that almost half of Medicare beneficiaries live on less than $15,000 annually. "It is unconscionable that the sickest and oldest Americans go without prescription drug coverage as part of their basic benefit package. Each year their social secutiry checks increase only at the rate of inflation, while the costs of the drugs they take rise at two, three or four times the rate of inflation," he added (Families USA release, 11/3). Pollack also claimed that "HMOs and other institutional purchasers get sharp discounts on prescription drug prices, but for most seniors who don't have a prescription drug plan, or have a very expensive one, they can't reap the reward of these benefits and have to pay full prices for drugs" (Bowman, Scripps Howard News Service/Knoxville News-Sentinel, 11/3).

Taking Exception
Officials at the Pharmaceutical Research and Manufacturers of America contend that the study, conducted by University of Minnesota researchers, is "skewed by a few unusual cases of big markups" (AP/Annapolis Capital, 11/3). Glaxo Wellcome spokesperson Rick Sluder also pointed out that percentage increases can be deceptive. For example, although lanoxin costs rose by 88% over five years, the actual price changed from nine cents per pill to 17 cents. "When you're working from a small base, the percentage looks large," he said (Appleby, USA Today, 11/4). Drug companies also claimed that 21% of prescription drug revenues are funnelled back into research for new cures and treatments that will ultimately benefit the elderly and others. But Carston Koeller, president of Wisconsin's Council of Senior Citizens, maintained, "Manufacturing, marketing and distributing costs do not constitute the increase in pricing seen here in the U.S." (Griffin, Milwaukee Journal Sentinel, 11/3). The report concluded, "Unless prescription drug costs are contained or seniors gain access to prescription drug coverage through Medicare, increasing numbers of seniors will find prescription drugs to be unaffordable" (Families Report, 11/99).

Special Delivery for Hastert
Meanwhile, in an effort to inspire action on the issue from Congress, the Iowa Citizens Action Network plans to collect seniors' prescription drug bottles Thursday and send them, along with bottles gathered in 17 other states, to House Speaker Dennis Hastert (R-IL). "Part of the concern is whether the price of prescription drugs is going up across-the-board fairly," Rick Kozin, executive director, said (O'Donnell, Des Moines Register, 11/2).

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