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Wanted: RX for Drug Prices
General Assembly makes little progress in stanching skyrocketing costs
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Business New Haven
6/18/2001
By: Linda Mele
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Anyone who has had to purchase prescription drugs regularly knows that prices have skyrocketed in recent years. If the trend continues, some patients won't be able to afford them much longer.
HMOs are no longer willing to be secondary insurers to senior citizens on Medicare, and both primary and secondary carriers have increased co-payments or dropped prescription coverage altogether in recent years. Others may pay only if a generic version of a drug is dispensed.
In most cases, drugs prescribed by a physician on a short-term basis are necessary for the good health of the individual taking them. There is a small percentage of people who don't really need a drug, but who are addicted and somehow convince doctors to continue writing prescriptions.
People with chronic illnesses such as diabetes, heart disease or high blood pressure - and who may also suffer from complications related to those diseases - need maintenance drugs on a regular basis to control their diseases.
And, as the Baby Boomer generation ages, the largest number of people needing and using prescription drugs at one time, over a prolonged period, is rapidly coming down the pike.
Lesley Mills is president of the New Haven-based Griswold Special Care. Her company provides home care for about 6,000 senior citizens throughout the state.
According to Mills, her employees have noted “an increase in levels of client stress due in part to rising drug costs.
“With the right information, we will then have a chance of exerting pressures to make the prescription drug system work the best possible way,” Mills says. “Or we may see that it already is working the best possible way.”
So, are the drug companies ripping off consumers? Why are they able to offer drugs to other countries at significantly lower prices than they charge in the U.S.?
Ask manufacturers and they'll tell you getting a new drug to market is a long, tedious and expensive undertaking. In addition, most people haven't the slightest idea of what it takes to get a drug to market.
Daniel O'Shea, a Pfizer Inc. vice president, says his company has 12,000 researchers working on a wide array of products all over the world and will spend $5 billion this year on R&D alone.
“There are about 16 million people in this country with diabetes who spend an estimated $98 billion annually on prescriptions or items related to their diabetes,” O'Shea says.
It takes on average 11 to 15 years to develop a new drug, and only three percent of those that make it to market show a return on investment, O'Shea says.
“In addition, what we earn on a drug, if anything, must also help fund the next generation of drugs,” O'Shea adds.
Philip Votto, president of Beirne's Pharmacy & Home Medical Equipment in New Haven, says it takes three pharmacists and four technicians working ten hours a day to fill the 500 or so prescriptions his company fills daily.
“Our gross profit ratio on prescriptions is 22 percent,” Votto says, “while it's much higher for other businesses.
“In most cases, doctors prescribe the brand name instead of the generic,” Votto adds.
State Rep. Peter Villano (D-91) of Hamden says the cost of prescription drugs is a “very hot issue” now and of the 18 different bills dealing with that issue that have been introduced on the state level, only two survived.
“We're trying to make realistic recommendations while dealing with budget realities,” Villano says.
Anthem Blue Cross/Blue Shield of Connecticut covers 1.2 million people for prescription drugs in Connecticut and a total of eight million people in eight states. Anthem spends $265 million per year on Connecticut prescriptions and $1.8 billion across its whole system.
Anthem vice president Karen Possidente-Leibiger says her company is constantly looking for ways to lower the cost of prescription drugs, especially maintenance drugs.
Fiona Scott Morton, associate professor of economics and strategy at the Yale School of Management, says pharmaceutical companies can market their products for less in Third World countries and help more people because of higher prices charged here in the U.S.
Morton also says Southern states are “getting together to form a large coalition to get the best possible price on drugs.”
Votto, perhaps, speaks to both sides of the prescription drug-cost debate when he says, “Somewhere, somehow, this nonsense has got to stop.”
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