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What’s New
More than 3 million seniors are falling into the doughnut hole—Medicare’s prescription drug coverage gap. That means they will continue to pay their monthly premiums for drug coverage, but Medicare will not pay for their drugs until seniors’ out-of-pocket drug costs reach $3,600. The 2003 Medicare law created this monstrosity and it prohibits Medicare from negotiating with manufacturers for lower prices. The Veterans Administration saves 50 percent on the costs of its drugs through negotiation. If Medicare prices were 50 percent less, many seniors would not have to worry about hitting the doughnut hole.
How You Can Help
E-mail your lawmakers and urge them to cosponsor “The Medicare Prescription Drugs Saving and Choice Act” (H.R. 752), which would allow Medicare to negotiate lower prescription drug prices with manufacturers.
Summary
Americans pay too much for their prescription drugs. The problem is primarily due to the manipulation of prices by the highly profitable pharmaceutical industry. The problem is worst for the 46 million uninsured Americans, who must either pay full price or go without needed medications. Other Americans are hurt as their health insurance plans increase their deductibles and drug co-pays. Meanwhile, in recent years the drug industry has been five-and-one half times more profitable than the average for Fortune 500 companies.
The pharmaceutical industry makes huge profits by flexing its political muscles. The industry spends more on campaign contributions and lobbying than any other industry except the insurance industry. PhRMA (Pharmaceutical Research and Manufacturers of America), which has several former lawmakers on its staff, spent $14 million last year on lobbying. According to one report, PhRMA employs 675 lobbyists in Washington, DC and hundreds more at state capitals.
They’ve used their political clout to:
1. Create loopholes in patent laws to keep lower-priced generic drugs off the market.
2. Legalize direct-to-consumer advertising that promotes new, expensive drugs that often are no more effective than older, lower-priced drugs.
3. Outlaw the importation of less expensive drugs from other countries such as Canada.
4. Use unscrupulous marketing techniques to influence doctors through gifts, such as free drug samples, free meals and paying them as “consultants.”
The new Medicare drug law, providing drug benefits to seniors, is the latest in a series of sweetheart deals that will guarantee huge profits to drug manufacturers for years to come. For instance, the new law prohibits Medicare from negotiating with manufacturers for lower prices. Meanwhile, the Veterans Administration saves 50 percent on the costs of its drugs through negotiation.
U.S. PIRG is calling on Congress to lower the outrageous cost of prescription drugs for consumers by ending these sweetheart deals for the drug industry.
In the States
In additon to our federal advocacy for lower prescription drug costs, the state PIRGs are leading the way to implement solutions at the state level. Read more about CoPIRG’s Affordable Health Care For Colorado campaign.
In the News
Falling Into the Doughnut Hole (New York Times, October 6, 2006)
Glaxo Agrees to Pay States $14 Million To Resolve Paxil Case (Wall Street Journal, March 29, 2006)
