Prescription Drug Costs: Out Of Reach

Drug companies have simply gone too far. From using illegal tactics to block affordable generic drugs from the marketplace, to spending billions offering gifts to medical professionals, the industry has boosted its profit margin at the expense of patients.

Meanwhile, many Pennsylvanians can't afford the medicines they need, and face tough decisions about which prescriptions they can take, and which they'll have to skip.

With a state-run buying pool, Pennsylvania could use its significant buying power to demand fairer prices, and pass those savings along to those who lack drug coverage.

Consumer Case Study

Carol McMahon must take seven different drugs daily, and the price tag exceeds $500 per month. The McMahons had drug coverage in their retirement plan. But when Mr. McMahon's former employer went bankrupt, the McMahons lost their benefits.

Unless Carol finds some way to pay for her prescriptions, she'll need to make some tough choices about which drugs she'll take and which she must skip.

Carol is not alone. One-third of seniors who suffer from congestive heart failure, diabetes or hypertension and lack drug benefits skip doses to make their medicines last longer.*

Drug Industry Not Playing Fair

Exaggerating R&D Costs: Drug companies say that high drug prices are justified by the cost of research and development (R&D). In fact, only 11 percent of drug industry revenue is spent on R&D.

Blocking Cheaper Drugs: Powerful drug companies use legal maneuvering to prevent cheaper generic brands from entering the market. For example, the maker of Taxol, a breast cancer treatment, unlawfully blocked competition for three years after its patent expired-costing consumers millions of dollars.

Skyrocketing Drug Costs

Consumers Pay Too Much: The average cost of one prescription in Pennsylvania was more than $50 in 2001. For those with chronic illnesses that need regular treatment, those costs add up. And for the uninsured, the cost of the most common prescription drugs in Pennsylvania are 78 percent higher than what the federal government pays for the same medicines.**

Senior Assistance Programs In Trouble: As drug costs rise, state-run pharmacy assistance programs (PACE and PACENET) for low-income seniors are running out of money. Unless we lower prices, many seniors who depend on the programs could lose their benefits within a year.

PennPIRG Director Beth McConnell, left, discusses health care issues with Evonne Tisdale of the Philadelphia Unemployment Project and Sen.Vincent Hughes. Photo: Staff

Lowering The Cost Of Drugs

Group Buying Power: The federal government negotiates the price of cholesterol drug Zocor down to $67.81, while an uninsured Pennsylvanian pays $145.77 for the identical drug.

Creating A State Buying Co-op: PennPIRG supports a plan that would give Pennsylvania the power to demand fairer prices. This would save consumers and the state millions of dollars. Drug companies would still make a profit, and more Pennsylvanians would be able to get the medicines they need.

A State Prescription Buying Pool

PennPIRG is working with decision-makers to win support for a state-run buying pool that would allow consumers and the state to use their combined buying power to negotiate lower prices, similar to what the federal government and big HMOs do.

The legislation would:

• Strengthen the state-run pharmacy assistance program for the elderly (PACE and PACENET) by allowing the administrators of the program to seek better discounts from the pharmaceutical industry.

• Pool the buying power of the tens of thousands of Pennsylvanians who lack prescription drug coverage, negotiating fairer prices from the pharmaceutical industry.

• Pass state-negotiated discounts to consumers who lack drug coverage.

• Give the state the authority to set price limits on drugs if the industry fails to negotiate.

• Require that the pharmaceutical industry report to the public the amount of money it spends on marketing and advertising, including gifts offered to medical professionals to influence their prescribing habits.

* Source: Kaiser Family Foundation, Pittsburgh Post-Gazette
** "Paying the Price" a survey by PennPIRG.