Wanted: Prescription for easing drug prices
Rising drug costs are taking dollars out of your paycheck.
It's time to elect leaders who can break the impasse.
This article, written by NEA staff writer John O'Neil, appears in the October issues of AFT publications and in NEA Today. It is a project of the NEAFT partnership, which creates programs and activities in area of common concern.
Like members around the country, Jean and Jim Scheu, retired teachers in Plymouth, Minn., regularly buy prescription drugs.
They don't buy them from their local pharmacist, however. The Scheus, members of Education Minnesota-Retired, a merged NEA-AFT affiliate, buy their drugs through a mail-order service operating in Canada.
By ordering from Canada, the Scheus, both 75, spend about $230 for a three-month supply of their medically required drugs. That's about one-third of the cost charged by local pharmacies. The discrepancy angers Jean Scheu. "Why should Canadians pay so much less for prescriptions?" she asks. "The price should be the same for everybody."
Welcome to the shameful world of prescription drug pricing, where pharmaceutical companies spend millions to entice doctors to prescribe the newest brand-name drugs, while many education employees find their budgets stretched because their health insurance does not provide adequate drug coverage.
"Across the U.S., health plan sponsors of small, medium and large size education employee groups are facing hefty insurance premium increases of 20 percent or more for 2003,"says NEA health insurance expert Carol Malone. "Prescription drug spending is directly responsible for more than 35 percent of this overall health premium increase."
As a result, health plan sponsors have been shifting a greater portion of the cost of prescription drugs to employees and their covered dependents. As the average cost of a prescription drug has risen from $3 in 1970 to $25 in 1990 to $65 in 2001, members are increasingly being asked to pick up some of the tab.
Drug companies claim that lowering their prices will force them to cut back on research and development. But the industry spends billions protecting its profits, according to the Alliance for Retired Americans, a coalition of more than 2.5 million union retirees. While the after-tax profits of Fortune 500 companies in 2000 averaged 4.9 percent, the after-tax median profits of pharmaceutical companies was a whopping 18.6 percent of revenues. Drug companies in 2000 spent more than $2.5 billion on direct-to-consumer advertising to persuade you to "ask your doctor about" the latest pricey name-brand drug.
All members should be concerned about the escalating costs of prescription drugs, but retirees like the Scheus are particularly hard-hit. The average annual amount each senior spends on drugs has almost doubled in the last decade--from $559 in 1992 to $1,051 in 2002, but one in three lacks coverage for outpatient drugs.
The need for fair prescription drug pricing is one reason the Scheus are backing U.S. Sen. Paul Wellstone (D-Minn.) in his re-election bid. Wellstone, a longtime supporter of universal healthcare, has been a key congressional advocate of measures to give consumers access to cheaper generic drugs and provide a prescription drug benefit through Medicare.
Jean and Jim Scheu are spending one day each week this fall working for his campaign. They plan to participate in phone banks, visit senior centers to talk about Wellstone's record on issues affecting senior citizens, and distribute literature.
This summer, the U.S. Senate considered and rejected several bills to add a prescription drug benefit to Medicare, although it did pass legislation to facilitate the reimportation of drugs from Canada to the United States (which would ease the way to lower prices).
The best--and maybe only--way to provide a guaranteed prescription drug benefit for seniors is to make it part of the existing Medicare program, AFT health benefits expert John Abraham says. "We should oppose efforts on Capitol Hill to privatize the prescription drug benefit by giving tax incentives to HMOs and other insurers to offer stand-alone prescription drug plans as they see fit."
The current impasse on prescription drugs makes it even more important to scrutinize candidates' records this election season to ensure they have constructive ideas for addressing the issue.
"During this election, members should support candidates who not only support a prescription drug benefit for Medicare but are also serious about controlling astronomical prescription drug costs," says NEA's Malone. "Until the cost of prescription drugs is brought under control, all citizens face the future risk of not being able to afford drugs at a time when they or their families need them most."











