Pressure Builds To Cut Rx Costs

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Pressure Builds To Cut Rx Costs

Americans over 65 aren’t buying the high cost of prescription drugs any more. And recently, much to the pharmaceutical industry’s distress, neither is some pretty big lobbying clout. Eleven major employers, including Wal Mart, Verizon, and General Motors, ten state governors and two unions formed a coalition called Business for Affordable Medicine. The coalition is loudly criticizing legal loopholes that allow pharmaceutical companies to keep generics off the market. The lack of access to lower cost generics is costing drug consumers millions, they say. The National Governors Association also surprised drug companies recently with a policy statement calling for congressional hearings on the matter.

On another front, the beleaguered pharmaceutical industry faces a new assault from a growing number of state prosecutors. More than 35 states hope to repeat the success of the nationwide campaign that led to the $208 billion tobacco industry settlement. Earlier this year Nevada and Montana, helped by a private law firm that successfully sued the tobacco industry, alleged that at least 17 drug makers and their affiliates defrauded consumers by abusing a system designed to guarantee Medicaid the lowest drug prices.

AARP also recently turned to litigation as a new tactic to fight drug costs. AARP joined three lawsuits accusing drug companies of paying their competitors not to market less costly generics.

Legislation that would provide affordable prescription drugs is still not assured, however. While the pressure mounts on Congress, the pharmaceutical industry is fighting back with an army of lobbyists. In 2001, drug industry lobbyists outnumbered all 535 Members of Congress. Last year the drug industry spent more than $78 million on lobbying—more than any other industry.

Sources: “Generics May Lower Health Care Cost,” Theresa Agovino, The Associated Press, May 2, 2002. “States Go to Court in Effort to Rein In Costs of Medicine,” Andrew Caffrey, Scott Hensley and Russell Gold, “The Wall Street Journal,” May 21, 2002. “Biggest Drug Companies Expand Lobbying Army in 2001,” “Public Citizen,” June 13, 2002.

For related stories see “Medicare Prescription Drug Benefit Uncertain” at http://www.tscl.org/NewContent/101411.asp and “States Move to Cut Drug Prices” at http://www.tscl.org/NewContent/101347.asp.

September 2002