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Drug Companies Profit at Expense of Seniors While drug companies set record profits on Wall Street, growing numbers of American seniors have no way to pay for the prescription medicines they need to survive. Many seniors who have little or no prescription drug coverage are getting crushed in a two-way cost crunch-they pay far more for their prescription drugs than large insurance companies and health maintenance organizations (HMOs), and those prices are climbing fast. The average senior pays twice as much for their drugs as the drug companies' "most favored customers"-large insurance plans and HMOs, according to a report prepared for the House Committee On Government Reform and Oversight. Seniors, for example, pay $61.85 more for Zocor, a common cholesterol drug (see chart), than "most favored customers." But, depending on the drug, the price difference can be even more dramatic. Synthroid, a commonly prescribed hormone treatment costs the average senior more than $27.05 a dose. An equivalent dose of this drug costs the manufacturers' "most favored customers" only $1.75, a difference of 1,446%. Compounding the problem, prices of several top-selling brands of prescription drugs jumped 10% to 20% over the past two-year period. Prescription drug sales are expected to climb 43% by 2002.
The House report found that "it appears that drug companies are engaged in a form of 'discriminatory' pricing that victimizes those who are least able to afford it. Large corporations and institutions with market power are able to buy their drugs at discounted prices. Drug companies then raise prices for sales to seniors and others who pay for drugs themselves to compensate for these discounts to the favored customers." The annual profits of the 10 leading drug companies in 1997 were $20 billion according to Forbes magazine. Legislation that would reduce the price of prescription drugs for Medicare recipients has been introduced in Congress. The bills have stirred up heated opposition from the pharmaceutical industry. Gouging Granny-The High Price Of Feeling Better Prescription Drug Manufacturer Use Prices For Favored Customers '98 Retail Prices For Seniors '98 Price Difference For Seniors Zocor Prilosec Norvasc Procardia XL Zoloft Merck Astra/Merk Pfizer Inc. Pfizer Inc. Pfizer Inc. Cholesterol Ulcers BloodPressure Heart Depression $42.95 $56.38 $58.83 $67.35 $123.88 $104.80 $111.94 $113.77 $126.86 $213.72 144% 99% 93% 88% 73% Average Price Difference 99% Source: "Prescription Drug Pricing In The United States: Drug Companies Profit At The Expense Of Older Americans," Minority Staff Report Committee On Government Reform and Oversight, U.S. House Of Representatives, October 20, 1998. "New Price Data On Prescriptions Show Big Hikes For Many Drugs," The Wall Street Journal, June 29, 1999. This article first appeared in Volume 4, Issue 10 of "The Social Security and Medicare Advisor" newsletter (October/1999). To receive future editions of "The Advisor" in its special, free e-mail version, please click here. | ||||||||
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