Many Americans cannot afford the medicine they need to live.
In fighting for the Prescription Fair Competition Act, I heard
testimony about a man taking only 1/3 of his prescribed doses of
heart medication because he couldn't afford refills, and seniors
who talked about difficult choices between buying food or costly
medication. One man had to divorce his wife in order for her to
obtain assistance buying prescriptions that he could not afford.
Not only were these people living on low incomes with serious
illnesses requiring more medication, but they were also forced to
pay much higher prices. Through a complex kickback arrangement,
drug companies get rich with a price discrimination scheme that
hits hardest on those least able to pay.
I know seniors who took buses to Canada for drug savings, even
with travel expenses. Something is wrong when people need to go
to Canada or Mexico to get a fair price, yet many politicians
refuse to acknowledge this scandal.
This week, a new study by Boston University researcher Dr.
Alan Sager confirms price discrimination by drug manufacturers.
The July 27 report shows that Americans pay 32% more than
Canadians for the same drugs, with even greater discrimination
elsewhere -- a 1992 federal study showed that drug manufacturers
charge wholesalers 60 percent more in America than in the United
This price discrimination is multiplied for many American
consumers, including seniors and the uninsured, who are excluded
from the manufacturers' kickback system.
"There is no free market for prescription drugs,"
according to the Sager report, allowing manfacturers to boost
prices. Dr. Sager reports that pharmaceuticals were the most
profitable industry -- with an incredible 39.4 % return on
equity in 1998 -- more than double the average of all other
Drug manufacturers claim high prices fund research. But the
Sager report dismissed that excuse, pointing out that in 1997,
Merck and Pfizer (two pharmaceutical giants) averaged only 11% of
revenue in research and development. In contrast, they spent 29%
for marketing and administration and 19% was profit.
Many seniors cannot afford essential medications, yet ten top
drug CEOs received compensation averaging $22.9 million each.
Dr. Sager attributes government inaction over discriminatory
pricing to the political clout and campaign contributions of the
drug manufacturers. That conclusion is not a surprise to
Minnesota seniors who saw the powerful drug lobby defeat
legislation that required nothing more than disclosure of
The Sager report concludes that we could have affordable drugs
for all Americans and no loss of money for research, yet still
leave pharmaceuticals with the highest profits of any industry.
Drug price discrimination should offend everyone's sense of
fairness. For those who are forced to choose between buying food
and medications, it can be a matter of life or death.
(Editor's note: The study, "Affordable Medications for
Americans -- Problem, Causes, and Solutions, was published by
Alan Sager, Ph.D. and Deborah Socolar, M.P.H., of the Access and
Affordability Monitoring Project at the Boston University School
of Public Health, 715 Albany Street, Boston, Massachusetts 02118
(617) 638 - 5042 fax (617) 638 - 5374.)