The real cost of drugs

A. On the television, via email, in newspapers and magazines – in almost every form of media you will find advertising and promotion for pharmaceutical drugs. However, unless they are subsidised at a government level, many of these drugs can be extremely expensive and prices are rising quickly. Americans alone now spend a staggering $200 billion a year on prescription drugs, and that figure is growing at a rate of approximately 12 percent a year. According to Medical Administrator Susan Miller, prescription drugs are the fastest-growing portion of the overall health care bill in the United States. Ms Miller explains that the increase in spending on pharmaceuticals reflects, in almost equal parts, the fact that society is taking significantly more prescription drugs than previous generations, that those pharmaceuticals are more likely to be expensive new ones rather than older, cheaper ones, and that the prices of the most heavily prescribed drugs are routinely increased by industry, sometimes as often as several times a year.

B. Pharmaceutical Company Chairman Simon Bell defends the high price of prescription drugs as inevitable in the light of research and development costs being enormous, and the high costs justifiable, since innovative medicines are vital as they lengthen life, improve quality of life and counteract the need for more expensive health care. But why, opponents of the pharmaceutical corporate argue, do prices of the more popular drugs need to be increased by so much and so often? Before its patent ran out, for example, the price of Schering-Plough’s top-selling allergy pill, Claritin, was raised thirteen times over five years, for a cumulative increase of more than 50 percent—over four times the rate of general inflation. Spokeswoman for one of the corporates accused of over-pricing, Lynne Bennett, explains that high prices and regular price hikes on the more popular products is not a sign of greed, but an opportunity to bring in higher revenue which can then be utilised for research and development of treatments for less common ailments and conditions.

C. Janet Abbotts, a prominent social services specialist believes that covering the cost of prescription drugs is no longer a problem of the ‘poor’ alone. The shape of healthcare provision in America - who is now paying for what - has inevitably changed as a result of economic recession, and the current situation now means that an even higher proportion of the population may struggle to obtain the pharmaceuticals they need. Abbotts believes that in times of economic difficulty, health insurance provision by employers will inevitably shrink. As one of the means of tightening overall corporate budgets, Janet says that there has been a definite trend towards employers requiring their staff to pay more towards the costs of healthcare themselves. In fact, Abbotts says, many businesses are going as far as dropping health benefits for workers altogether. Since prescription drug costs are rising so quickly, the current payers of the overall medical insurance bill – employers, are particularly eager to shift such costs to individuals. The result is that even where medical insurance bills are part of the employment contract, more and more companies are moving towards clauses where individuals have to pay a greater fraction of their drug bills themselves.

D. Many observers believe that the sector of society most often adversely affected by higher pharmaceutical prices are retired people with no, or restricted, earning potential and an often increased need for medical intervention. Naturally, the elderly tend to need more prescription drugs than younger people—mainly for chronic conditions like arthritis, diabetes, high blood pressure, and elevated cholesterol which are more prevalent in old age. Medical improvements and developments have actually widened the gulf between this group’s needs for and actual access to the pharmaceuticals required says Peter Stantham, founder of Age Today, a leading charity supporting the elderly.

E. He explained that when Medicare was introduced in the USA in 1965, people in general took far fewer prescription drugs and that the pharmaceuticals they did take were cheap – senior citizens at that time could generally afford to buy whatever they were prescribed, without the need for payment by an insurance company. How times have changed, says Stantham. Currently research estimates that only approximately half to two thirds of America’s elderly have supplementary insurance that partly covers prescription drugs, and for future generations it is anticipated that percentage will drop even more significantly, as employers and insurers move away from providing the comprehensive cover enjoyed by previous generations. Stantham references one study which was conducted as far back as 2001 in the U.S. which disclosed that nearly one in four senior citizens reported that they deliberately skipped some doses of their medication or did not even take prescriptions given to them by doctors to pharmacies for pick up at all because of the cost.

F. Susan Miller, objects most strongly to a pharmaceutical industry pricing practice that she believes actively disadvantages the elderly and other groups who have the greatest need for pharmaceutical products but can least afford them. The practice means that Medicare recipients without supplementary insurance (this group being most highly represented by the elderly and the poor) pay much more for pharmaceuticals than favoured customers, such as large HMOs (health maintenance organisations which provide medical healthcare coverage) or the Veterans Affairs (VA) system (which provides medical healthcare coverage for ex-military personnel). Because such concerns purchase in bulk, Miller explains, they are able to bargain for significant discounts or rebates. On the other hand, people without insurance have no bargaining power and so they pay the highest prices.