Reality – The drug makers’ short-term profit maximization is the real long-term threat to adequate research financing. If drug makers do not compromise today and find a way to make all medications affordable for all Americans, an angry future Congress will eviscerate profits, [which] could really harm future research.
- Myth – Drug makers spend their money [wisely], and spend much more on research than on marketing.
Reality – Drug makers spend money very [poorly], exaggerating their research spending and distorting and minimizing their marketing efforts. In 1999, the top six drug makers spent only 11 percent of their revenue on R&D, while 16 percent went to profits and 31 percent went to marketing and administration.”
Drug industry pricing strategies have boosted the industry’s profits to extraordinary levels. The annual combined profits of the top ten drug companies are over $25 billion. This is outrageous. According to USA Today, “These same profits are expected to grow an additional 25% in the coming years. This profit percent is 4.5 times the 4.4 percent median profit for all Fortune 500 Companies.” In addition, drug prices in the United States are, by far, the highest in the world. The OMO Organization reports, “American consumers pay 72 percent more than consumers in Canada and 102 percent more than the consumers in Mexico. One can see why we travel to our borders for our ‘life sustaining’ medications.”
The cost of prescription drugs is particularly important to our seniors in America because they have more medical problems and take more prescription drugs than the average American. The situation is further exacerbated by the fact that the Medicare program fails to cover the costs of most prescription drugs. One can purchase supplemental insurance, but the policies are often expensive and inadequate. Senior citizens covered under Medicare are spending an average of 17 percent of their own money on prescription drugs. According to the AARP, “Americans over 65 – the group that relies on prescription drugs the most – are the most likely not to have drug coverage to help pay for medications.”
According to Arianna Huffington of Seniors USA, “For the first time, the pharmaceutical industry is finding itself…in the crosshairs of federal investigators. No fewer than 20 drug companies including Bristol-Meyers, Eli Lilly, Pfizer, and Bayer are being investigated by government agencies, including the Justice Department, the Food and Drug Administration, the Federal Trade Commission, and the Department of Health and Human Services.” Something needs to be done before both sides come crashing together and Congress is forced to act because of pressure from its constituents. This will, in the long run, make the problem worse and put further restrictions on research and development, as the drug companies strive to keep the same profits after the congressional restrictions are applied.
Cutting some manufactures’ profits is essential to making medications affordable for all. Alternatives such as continued increases in private insurance spending and public subsidies or voluntary private medication insurance are unaffordable and unworkable.
The OMO claims that “this year residents of the United States will pay drug manufacturers in excess of $96.5 billion for brand name prescription drugs”. If pricing could be set to the Federal Supply Schedule (FSS) cost level, that would total a savings of approximately $35.3 billion a year for our citizens. With these price cuts, nation wide payments to brand name drug makers would drop about 37 percent of the current year bill. Of the $35.3 billion in savings, approximately half would go to private third party insurance and one-quarter to consumers who pay out of pocket. Medicaid, hospitals, and nursing homes would split the remaining one-quarter.
President Bush stated recently, he was going to attempt to get legislation passed to block pharmaceutical companies from filing multiple patent-protection lawsuits that can stall cheaper products for years. The Washington (AP) recently stated Bush as saying, “the careful balance of the law is being undermined” by drug companies that repeatedly seek 30-month delays in the expiration of their patents. The administration estimated the change would save $3 billion in drug costs per year. The Federal Trade Commission found earlier this year that big pharmaceuticals are increasingly using this tactic to fend off competition and keep generics out of consumers’ hands, sometimes for many years. Senator, something must be done.
Congress could act to assure all Americans get the medications they need while drug makers are kept financially satisfied. Prices could be cut, but the drug makers’ total revenue could be restored through making many more drugs to fill the rising number of prescriptions. United States drug prices and spending per person are already the world’s highest. Americans spend more than enough already to cover the cost of all needed medications.
One needs to have the power of numbers behind him to receive a fair deal when it comes to prescription drug prices. Please speak to others in Congress to influence a policy change and unify our vast numbers throughout this country in order to save the millions that suffer everyday needlessly because of a lack of prescription medications.
If Congress fails to act soon, state legislation will be needed. You can protect citizens today while helping to spark federal legislation tomorrow. Please be a catalyst for change before it is too late.
Sincerely,
