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Second Opinion: Rising Cost of Prescription Drugs II
Hosted by Abigail Trafford
Washington Post columnist
Wednesday, Aug. 15, 2001; 2 p.m. EDT
Welcome to Second Opinion, a weekly column and Health Talk discussion with Post Health columnist Abigail Trafford.
A retired prison guard in North Carolina ran up a hospital bill of $5.2 million. A 75-year-old woman who suffers from Alzheimer's Disease spends more than $1,000 out of pocket for all her prescription drugs even though she is on Medicare. Why do prescription drugs cost so much?
The cost of prescription drugs for common conditions such as heart
disease, arthritis, diabetes is rising. And Medicare does not
cover outpatient prescription drugs.
To answer these questions and to talk about the consumer perspective of the rising cost of prescription drugs is our guest Dee Mahan, a health policy
analyst for Families USA.
The transcript follows.
Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.
Abigail Trafford:
Hello everybody. Are you having trouble getting the drugs you need because they cost so much? Yesterday we talked to a representative from the drug industry. Today we're talking to a policy analyst with the consumer group Families USA. What's your experience? Are you covered. Are you waiting for Congress to act? Your state government? Send us your questions and comments.
Abigail Trafford:
Welcome Dee Mahan. You're here to tell us what's going on with prescription drugs from the consumer perspective. Let's begin with the same old questions: why do prescription drugs cost so much?
Dee Mahan: Drug companies consider a lot of different things when they set prices for their products,including their costs and their anticipated profits. But the bottom line is that this is the most profitable industry in the country, and in 2000 had profits that were nearly 4 times the average for Fortune 500 companies. To maintain that kind of financial performance, companies have to charge a lot for their products. There is also the issue of patent protection for new drugs. When a manufacturer has a patent, it has a monopoly, and can essentialy charge what the market will bear. It isn't a free and competitive market for patent protected drugs.
Abigail Trafford:
The drug industry says that it takes 12 - 15 years and $500million to get a single drug on the market. The price has to cover a lot of "dry holes." And if they don't make a good profit, research will stop and there won't be any new medicines developed in the future. What's your response?
Dee Mahan: There is a lot of controversy over the $500 million figure to bring a drug to market. Even not considering the issues surrounding that figure, the industry has consistently been one of the most profitable in the country with an average return on investment that is many times higher than the average for other industries. If R&D is so risky, it is unlikely that the industry would consistently have that kind of performance. The industry depends on R&D and it is unlikely that would stop. With lower prices, the industry would likely look at reducing its high spending on marketing and other discretionary items.
New England:
As someone with a parent on a lot of medication, Canada is a real asset in the fight against such high drug mark-ups. The US is trying to make it illegal to go to Canada for perscription drugs - like my mom cares that she risks jail time - she almost 90 and no jury here would ever convict her. (Actually if she was in jail for going to Canada, the State would have to cover her medical bills - kind of ironic.)
What are your thoughts about "seniors' trips" across the border? In New England it is a relatively short trip. I feel bad for those down south. Abigail Trafford:
Bravo for your mom! Would she really risk going to jail? Is it illegal to go across the border and get Claritin at a lower price? Dee, what about these seniors trips across the border? How common are they? They sure have focussed public attention on the price differential between drugs in Canada and drugs in the U.S.
Dee Mahan: These trips to Canada, which are not illegal, certainly have focused attention on the difference in price between drugs in the US and Canada. They have also focused attention on the need to add a prescription drug benefit to Medicare so that these trips won't be necessary.
Tina in Falls Church, Va.:
I am curious about the recent news about ins. companies trying to get selected allergy meds reclassified as OTC drugs.I worship at the shrine of Allegra. I am blessed with an excellent prescription plan and only pay 5 to 10 percent of the cost. If this drug moves to over-the-counter status do you think the cost will continue to be as high as when classified as prescription? The "full" price for my Allegra is about $120.00 for 60 caps. I wonder who could afford to pay that amount if it was available without a prescription? Thank you. Abigail Trafford:
Hello Tina--and you are lucky to have an excellent prescription plan. Is it a supplemental policy? How much does it cost you? You hit the nail on the head regarding the recent news that Allegra and similar medicines might go over-the-counter. The cost would be lower than prescription drugs--but higher than the copay you are now paying. In the end, the cost would be shifted to the consumer. Dee, what do you think about this proposal to make these prescription drugs available over the counter?
Dee Mahan: It is great that you have a good prescription plan, which millions of people don't have. Most drugs when they go over the counter will go down in price. But I can't tell you by how much compared to what you're paying now with your insurance. For people without insurance, moving to over the counter could make Allegra more affordable.
Little Rock, Arkansas:
How will the proposed Medicare Rx drug coverage compare to drug coverage in group health insurance provided by employers?
Dee Mahan: There are a lot of proposals being considered at this point so we can't say how a final plan would compare to employer coverage at this point and also employer plans vary a great deal. The plans being considered generally have a monthly premium that is sometimes pretty high, and some have gaps in coverage. We would like to see a plan that is affordable, has protections for low-income Medicare beneficiaries, doesn't have any gaps in coverage, and provides full coverage for catastrophic costs.
Olympia, Washington:
What is PhRMA's answer to the question: how can folks avoid to take their prescripiton drugs? Thanks! Abigail Trafford:
Hello Olympia and I'm putting your question up in case there is someone from the pharmaceutical industry who'd like to answer. You raise the point that taking drugs is not a choice like choosing to buy a car or go to a restaurant. The doctor prescribes the drug and you're supposed to get it. You can't avoid taking prescription drugs--and you shouldn't not take your medicine. The problem is how do you pay for them when you don't have the money? What do you do? You can't simply stop taking the medicine if your health and wellbeing depend on the medicine. Dee, what are your thoughts?
Dee Mahan: I'm wondering if the question is about splitting pills or other strategies to cut medication costs. Splitting pills or otherwise taking less than the prescribed dosage is dangerous. That consumers are even routinely considering ways to reduce dosages to cut medication costs again points to the need lower drug prices and improved drug coverage.
New York, N.Y.:
How much does the pharmaceuticl industry spend on lobbying members of Congress and state legislatures?
Dee Mahan: I don't know the exact number off the top of my head, but it is a lot of money - millions of dollars. There are reports indicating that there is more than one lobbyist for each member of Congress.
Raleigh North Carolina:
I agreee with your position that we need to add prescription drug coverage to Medicare. Many seniors have to pay a major portion of their monthly income to cover the cost of prescriptons not covered by Medicare. Is there hope for Medicare reform this year that would include prescription drug coverage?
Dee Mahan: We think that Congress will take up this issue in September. We are urging everyone to contact their members of Congress to move on this issue and tell them to vote for Medicare drug coverage, and that the issue should be addressed and resolved as quickly as possible.
Boston, MA:
Hi Dee - We've heard that one reason for the high cost of prescription drugs is that brand-name companies are doing a number of things to keep generics, a more affordable alternative for many consumers, off the market. Are you aware of anything that is being done to stop this?
Dee Mahan: It's true that there are a number of things that brand-name companies are doing to keep generics off the market and the current system actually encourages law suits to keep generics off the market. There are a number of consumer suits around this issue right now. There is also bi-paritisan legislation pending to close the loophole in the current system. This would be in consumers' interest because prices drop by up to 40% when a generic comes to market.
Pittsburgh, Pa.:
Why do they spend as much on marketing as on r and d?
Dee Mahan: Marketing expenditures have a huge pay back for drug manufacturers. Advertising drives demand for products. The 25 most advertised drugs accounted for 41% of overall spending increases in 1999.
Phoenix, Ariz.:
Notwithstanding the patent/monopoly issue, how do you counter critics who suggest that, in our capitalistic society, drug companies (and everyone else) should be allowed to make as much money as they can? Why should they sacrifice profits, when they are, afterall, in the business of making money?
Dee Mahan: We are not opposed to the industry making money. We do, however, the question is the level of profits, particularly when so many people can not afford medications.
St. Paul, Minn.:
Can you update us on the status of President Bush's RX Drug discount card plan? Will the plan be through a specific RX company such as Merck-Medco? Abigail Trafford:
This is a subject that really interests people. A survey by the Kaiser Family Foundation/Harvard School of Public Health found that more than six in ten Americans--63 percent--closely followed President Bush's proposal to use discount prescription drug cards to assist the elderly with prescription drug costs. Dee, tell us a little more about this plan. How would it work? do you like it?
Dee Mahan: The discount card program is the subject of a lawsuit now and I can't tell you the outcome of that. But as designed, the cards will be offered through several companies like Merck-Medco. The discounts will probably not be that high and consumers will still have to pay a large percent of drug costs. The cards are not offering much more than what is currently available through some existing discount programs.
New York, N.Y.:
How much of the research leading up to important new drugs is done at public expense? What are the obligations of drug manufacturers who base their products on publicly funded research?
Dee Mahan: There is a study that indicates that according to NIH, tax-payer funded scientists conducted 55 percent of the researchprojects that led to the discover and development of the top selling drugs in 1995. We think this calls into question the industry's claims regarding research and development costs.
Staunton, Va:
Because of the high cost of some prescriptions, I'm finding that people who are prescribed medicine for mental health conditions either can't afford them or refuse to pay for them. Of course, you can't force a person to take medication, but so many people with these kinds of problems end up not getting the medication necessary for them to function; consequently they end up on the streets, or in jail. It seems like there is less focus now on helping these people than anytime before I can remember. Do you see this as the case? Abigail Trafford:
Good question. And the tragedy is that medicines can help a lot of people. Dee, what about the situation for people with mental health conditions?
Dee Mahan: There certainly should be more focus on drug coverage and access. Regardless of the level of innovation, if drugs don't get to the people who need them, they don't do much good.
Silver Spring, Md.:
Couldn't many of these problems surrounding prescription drugs be solved if the FDA would just stop requiring prescriptions for so many of them? Non-narcotic drugs could (and should) easily be available over-the-counter, and then The FDA, AMA, HMO's, Insurance companies, etc....could get out of the whole mess once and for all, and leave medications to the people who SHOULD be dealing with them....the paitients. Abigail Trafford:
But then we consumers would be paying a lot out of pocket for otc drugs because they wouldn't be covered by insurance. Of course for people who don't have insurance, otc status would make these drugs less expensive.
Dee Mahan: This is really a medical decision - whether a drug is the type that requires a prescription or can be sold over the counter. I'm not a physician, so I can't address whether more should go OTC. But, we support the idea of drugs going over the counter when medically appropriate.
Pittsburgh, Pa.:
Don't the discount cards label people in the same way food stamps label people? Labels always seem to backfire as a way of doing business.
Dee Mahan: It is just my opinion, but I don't think that they do. People present all sorts of card in drug stores these days. Prescription drugs are so expensive that any price reduction can help a bit. Still, even with the cards as proposed, people will still have to pay a large portion of drug costs. We think that there are better and more comprehensive ways to help people get access to drugs, particularly low-income individuals.
Washington, DC:
I'd like to respond to the question to PhRMA as I am an employee of the assocation. The pharmaceutical industry strongly supports efforts to expand prescription drug coverage for seniors. Medicare is a 36-year-old program and must be brought up to needs of seniors in the 21st century. We've been most encouraged by bipartisan proposals that would enable seniors to choose from competing private-sector health plan (including RX coverage). We believe it's critical that seniors have the ability to CHOSE for themselves the health plan is fits their individual need -- rather than a one-size fits all government-run program. The model that seems to make good sense is the health care model that serves members of Congress and other federal employees. Abigail Trafford:
Thank you PhRMA. Dee, what's wrong with everyone in Medicare getting the same deal that federal employees and members of Congress have? That's great health coverage!
Dee Mahan: We are glad to see that the drug industry is recognizing the need for a Medicare drug benefit - that hasn't always been the case. But even the private insurance industry has said that doing this through them won't work. We also think that there should be a uniform benefit - not one that is confusing or that provides different levels of coverage for different individuals and that any drug benefit in medicare should be voluntary.
Phoenix, AZ:
How is direct-to-consumer advertising driving up the cost of prescription drugs? What is your opinion on DTCA?
Dee Mahan: Direct to consumer advertising does appear to be driving up the cost of drugs. In one of my answers, I talked about how the most advertised drugs accounted for 41% of the overall increase in spending in 1999. It is important that consumers have information on drugs, but "hype" add can inappropriately generate demand and result in increased costs. Advertising also is greatest for the most expensive drugs.
Washington, D.C.:
As someone who covers this issue professionaly, I don't understand what you are saying when you criticize drug companies for making a profit. You should congratulate them on being sucessful or is that not the American way? What is your point with this sly attack on capitalism
Let's not forget DTC advertising wouldn't be popular without 50 year olds who still want to be thin, have sex like newlyweds and maintain a pleasant emotional high that these new class of drugs provide for them. Abigail Trafford:
Thank goodness for baby boomers! Dee, your thoughts on this?
Dee Mahan: We don't have a problem with the drug company making money. The profits do, however, seem unusually high - four times the average for Fortune 500 companies in 2000.
Boston, Mass.:
Isn't it true that much R & D is actually supported by tax-payer dollars?
Dee Mahan: A great deal of R&D is. I think that I answered one question talking about NIH scientists and their role in research.
Dallas, Texas:
What is the likelihood that we will see a Medicare drug benefit this year and if we do, do you think that it will be for just the low income seniors?
Dee Mahan: This is a question of how much Congress hears from people. As I stated before, we urge people to contact their members of Congress on this issue. Members of Congress will look to their constituents for guidance on this issue.
Tina Falls Church, Va.:
The prescription plan I have is provided by hubby's employer. He works in the food industry and this is part of his union contract agreement. We pay nothing for the coverage. He has 25 years in service and his seniority gives him the highest level of coverage. The "newer" employees have a good plan but not as good as ours. If a drug moves to over the counter does it lose patent protection automatically ; therefore allowing competition?
Dee Mahan: Patent protection is a separate issue from OTC status for a drug.
St. Paul, Minn.:
To answer the question from New York about pharmaceutical spending on lobbying, according to a Public Citizen report released in July 2001, the drug industry spent $262 million on political influence during the 1999-2000 election cycle, including $177 million on lobbying. In addition, the RX industry hired 625 lobbyists in 2000. Abigail Trafford:
A participant in Boston sent us the same information. Thanks a lot.
Dee Mahan: Thanks a lot - I have a copy of the report but didn't have the numbers handy.
New York, N.Y.:
Doesn't some sort of line have to be drawn between reasonable price incentives and profiteering?
Dee Mahan: Thanks - I think that some of my answers have addressed this question - but I would agree.
Vienna, Va.:
Why do so many drugs require a prescription when they could easily be sold over-the-counter, especially when they don't have strong side effects? I'm not advocating that people try new drugs on their own or have open access to narcotics like opium and morphine....a doctor's advice is always a good thing, but if you have tried a drug under a doctor's advice and you KNOW it works well and does not give you marked side effects, why should you have to go through the bother (and sometimes an added expense)of going to the doctor's office or making a call just to get a piece of paper that authorizes you to buy the drug in the first place? This is absolutely ludicrous, and it sounds like a racket to me...it stifles price competition by artificially limiting supply and demand. Abigail Trafford:
A lot of strong feelings! ! Don't you like to go to the doctor regularly, , , , ? Don't you like to support the drug industry. . . ?For some drugs--oral contraceptive pills, for example, having them otc would make life a lot simpler. Dee, what do you think? What about the concern of mis use and side-effects?
Dee Mahan: I think that this is really a medical issue - whether it is appropriate for a drug to be OTC or available only with a prescription. I'm not a physician, so I can't answer whether it is appropriate to take certain drugs OTC.
Fairfax, Va.:
I order my prescriptions by mail (for chronic asthma) and my copayment, which was originally equal to that of a single month's payment at a pharmacy, just doubled--the company apparently realized i was saving money by using a mail company. I still have a good plan--I could never afford these drugs out-of-pocket, but I resent having the price hiked just because they CAN. I HAVE to pay; I NEED the drugs. Abigail Trafford:
In other words your a hostage to your health plan. So am I. What do I do when they raise co-pays and premiums? Health insurance companies are pretty cavalier about hiking up my contribution. Dee, is there anything an individual can do to prevent these increases? Is this something big companies can negotiate on behalf of their workers--which is why people who work for larger firms often have better health coverage.
Dee Mahan: You can talk with your benefits administrator - particularly if you work for a large company. That's one of the benefits of having an employer to negotiate for you, which is something that persons without insurance don't have. You might want to check out whether there is a mail order option in your health plan that might be less expensive.
Minneapolis, Minnesota:
What will be the impact of Bush's stem cell decision on the cost of drugs in the future. If stem cell research is largely privatized as a result of that decision, won't Americans pay a price down the line in increased drug costs?
Dee Mahan: ANy drugs that would come out of stem cell research are so far in the future that it is difficult to talk about the cost of those drugs and the impact on health care costs more broadly.
Santa Fe, NM:
I've been able to buy prescription drugs from Canada without traveling there. My Dr. faxes a list of my prescription drugs to a pharmacy, with my credit card #, and the drugs are mailed to him for me to pick up -- or, more recently, to me c/o him, at my home. The drugs are in the manufacturers' original packages. I save more than 50%.
Is this legal?
Dee Mahan: I know that this is happening. And again, it is a shame that people are having to turn to other countries to get their prescriptions filled - particularly seniors who don't have a drug benefit in Medicare. I'm not one hundred percent sure of the laws on the mailing for pick up, but you can travel to Canada and purchase prescriptions for your own use.
New York, NY:
I'm not with the pharmaceutical industry, but PhRMA has given a clear answer to the Olympia, Washington, question: they'd be very happy to have government subsidize prescriptions for those who can't afford them otherwise. Abigail Trafford:
Thanks, New York. But if the government subsidizes coverage doesn't that mean that you and me as tax payers are the ones who are realy paying for it? Dee what do you think of government subsidies for those who can't afford their drugs?
Dee Mahan: Drugs are so expensive that a government subsidy is necessary for all but the rich, well insured, to get access to drugs. That's why we support a voluntary and comprehensive benefit for everybody who depends on Medicare.
Oakton, Va.:
Silver Spring brought up a good point, and I think you fail to see it. "Medical" decisions involving whether or not a drug should be sold OTC or only by prescription are not really medical...the point is that many drugs CAN safely be sold OTC, yet they are prevented from this by "doctors" and bureaucrats that enforce a cumbersome FDA set of artificial rules that often take the place of common sense. I now this for a FACT...I have to get prescription refills myself for drugs that I can take safely OTC, yet the system won't allow me to just get them OTC. Ridiculous.
Dee Mahan: That's why it is important for consumer activism. You need to keep working to have your voice heard. You also need to remember that it is in the interest of the drug companies to keep drugs available by prescription, particularly while they are on patent, because prices remain higher. We want the FDA to make quick, and medically appropriate, decision about switching a drug to OTC.
Santa Fe, NM:
Increasingly, conditions are treated with pharmaceuticals which were previously treated with surgery. So we have the irony that Medicare will pay a surgeon to "cut it out" but won't pay for a pill which will avoid surgery.
Dee Mahan: That's a great question and we agree with you. That's why it is so important to add a prescription drug benefit to Medicare. If Medicare were developed today, there is no question but that drugs would be included in the benefit. You need to keep pushing Congress to move on adding a drug benefit to Medicare.
Abigail Trafford:
Thank you all very much. Our time is up. Thank you Dee Mahan for being our guest. Join me next week on Tuesday for another online discussion of health topics in the news
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