DRUG WAR
Prescription Drug Makers Profit at Seniors’ Expense
VIEWPOINT: Public Citizen Advocacy Group
So you think you know about prescription drugs? OK, let’s see:
1) What little pill was more heavily advertised in 2000 than Bud and Pepsi?
2) What drug company had more profits in 2001 than all of the Fortune 500 homebuilding, apparel, railroad and publishing companies combined?
3) How many of the 50 most popular drugs were discovered with taxpayer-funded research?
4) Compared to all other industries, how much higher or lower is the federal tax burden on the drug industry?
Answers: 1) Vioxx; 2) Pfizer; 3) 45 and 4) 40% lower.
For those who didn’t score all that well on the quiz, read on.
One-quarter of the American population lacks prescription drug insurance.
Seniors are hit particularly hard because they use more prescription drugs,and data shows that drug coverage for seniors is declining and becoming more costly.
Like other Americans without coverage, seniors say they sometimes go without medicine because they can’t afford it. Even seniors who can afford prescription drug insurance find it increasingly expensive as insurers raise premiums, hike co-payments and impose spending caps.
In addition, drug prices are climbing at dramatic rates and Americans now pay far more per prescription than consumers in other countries. Compounding the problem is a rising tide of TV ads that are boosting demand for expensive brand-name drugs.
The upshot of all this,increased use, an aging population, high prices and proliferating ads,is that overall American spending on drugs is skyrocketing and will triple in 10 years, just as it did in each of the last two decades.
In 2001, a year that saw a drop in employment rates, a plunge in the stock market and symbols of America’s economy literally come crashing down, once again the drug industry “was more profitable than any other,” according to the Fortune 500 analysis of America’s largest companies.
And the drug industry outpaced other industries by a wide margin in 2001, as Fortune 500 drug companies enjoyed a return on revenues that was eight times higher than the median for all Fortune 500 industries.
No wonder Fortune magazine says that the pharmaceutical industry “showed some impressive gains.”
Drug industry executives argue that they need extraordinary profits to fund the “risky” research and development of innovative life-saving drugs. Industry officials claim they need to extend monopoly patents on drugs for similar reasons.
But the evidence doesn’t support such contentions, for the following reasons:
– For decades the drug industry has topped other industries in measures of profitability, showing that its research could not be too risky, or it would not consistently reap such high earnings.
– Drug companies spend a significant share of their research efforts not on innovative new drugs, but on slight alterations to already successful drugs.
– The industry benefits from federally funded research, which has played a part in developing the most popular drugs on the market,and in reducing industry research costs.
– Drug companies receive huge tax breaks, which amount to another taxpayer-subsidy.
– The federal government also has extended the life of drug patents through a series of new laws in recent years.
The drug industry is one of the most potent political forces when it comes to influencing legislation in Washington.
Through inside-the-beltway lobbying, campaign contributions, issue ads, funding front groups, and conducting “astroturf” grassroots lobbying, the industry largely gets what it wants from politicians in Washing-ton.
At the top of the industry’s agenda has been opposition to prescription drug coverage under Medicare and hostility to measures that would moderate rising drug prices. The industry’s political investments have paid off as Congress has failed to provide Medicare prescription drug coverage.
Instead, Republican leaders have promoted proposals that would encourage seniors to get drug coverage through private insurance companies and health maintenance organizations, preventing the Medicare program from negotiating substantial price cuts.
Adapted from a report by Ralph Nader’s Public Citizen organization: “America’s Other Drug Problem: A Briefing Book on the RX Drug Debate.”
