[Senate Hearing 107-146]
[From the U.S. Government Publishing Office]
S. Hrg. 107-146
THE HIGH COST OF PRESCRIPTION DRUGS
=======================================================================
HEARING
before the
SPECIAL COMMITTEE ON AGING
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
JEFFERSON CITY, MO
__________
AUGUST 27, 2001
__________
Serial No. 107-13
Printed for the use of the Special Committee on Aging
U.S. GOVERNMENT PRINTING OFFICE
75-461 WASHINGTON : 2001
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpr.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
SPECIAL COMMITTEE ON AGING
JOHN B. BREAUX, Louisiana, Chairman
HARRY REID, Nevada LARRY CRAIG, Idaho, Ranking Member
HERB KOHL, Wisconsin CONRAD BURNS, Montana
JAMES M. JEFFORDS, Vermont RICHARD SHELBY, Alabama
RUSSELL D. FEINGOLD, Wisconsin RICK SANTORUM, Pennsylvania
RON WYDEN, Oregon SUSAN COLLINS, Maine
BLANCHE L. LINCOLN, Arkansas MIKE ENZI, Wyoming
EVAN BAYH, Indiana TIM HUTCHINSON, Arkansas
THOMAS R. CARPER, Delaware PETER G. FITZGERALD, Illinois
DEBBIE STABENOW, Michigan JOHN ENSIGN, Nevada
JEAN CARNAHAN, Missouri CHUCK HAGEL, Nebraska
Michelle Easton, Staff Director
Lupe Wissel, Ranking Member Staff Director
(ii)
C O N T E N T S
----------
Page
Opening Statement of Senator Jean Carnahan....................... 1
Panel I
Norma Muhleman, Florissant, MO................................... 3
Edna Sowells, Poplar Bluff, MO................................... 7
L.C. Lakes, St. Louis, MO........................................ 14
Panel II
Robert Schmalfeld, AARP Volunteer Congressional District
Coordinator, St. Louis, MO..................................... 28
Ken Bougeno, First Vice President, Missouri Council of Senior
Citizens....................................................... 37
Anne Steele, Advocacy Chair, Older Women's League, St. Louis, MO. 40
Panel III
Dr. Lanis Hicks, University of Missouri School of Medicine....... 52
Dr. Stephen Zweig, Department of Family and Community Medicine... 64
APPENDIX
Written Testimony submitted by Mrs. Ruengert..................... 75
(iii)
JEFFERSON CITY FIELD HEARING THE HIGH COST OF PRESCRIPTION DRUGS
----------
MONDAY, AUGUST 27, 2001
U.S. Senate,
Special Committee on Aging,
Jefferson City, MO
The committee met, pursuant to notice, at 10 a.m., in the
Capitol Building, Second floor, House Hearing Room 7, Jefferson
City, MO, Hon. Jean Carnahan, presiding.
Present: Senator Carnahan.
OPENING STATEMENT OF SENATOR JEAN CARNAHAN
Senator Carnahan. Good morning. I call the hearing to
order. I want to welcome each of the panelists that is going to
be here today and thank you for participating on what is a very
important subject.
I would also like to thank each member of the audience for
being here today. As many of you know, I am a member of the
Special Committee on Aging in the Senate, and our job is to
help the Federal Government meet the needs of seniors. We
gather information for the Senate, we highlight important
issues, and we make recommendations to our colleagues.
Today we are here in Jefferson City to spotlight the high
cost of prescription drugs. There has been a lot of discussion
in Washington on the topic, but I wanted to come here and hear
from you directly here in Missouri.
As you know, Jefferson City was my home for nearly 8 years.
Not only the Missouri capital, it is part of America's
heartland. So I want to come here to mid-Missouri to hear your
thoughts on drug prices and how it affects your everyday lives.
During today's hearing, we will be receiving testimony from
a variety of people from across the State. I am pleased to
announce that Senator John Breaux of Louisiana, the Chairman of
the Special Committee on Aging, and Senator Larry Craig of
Idaho, the Ranking Member, have sent staff members to be with
us here today as well, and together we will see that your
message is taken back to Washington and conveyed to the Senate
Committee on Aging.
Your message could actually not be more timely because next
week, when we go back to Washington, back into session, this
will be a high-priority item, the cost of prescription drugs.
Why is this such an important issue? It is important
because Medicare, the Federal program that provides health
insurance for some 40 million elderly and disabled Americans,
does not include a prescription drug benefit. While it may not
have been a necessary component of Medicare when the program
was first created back in 1965, it is certainly unacceptable
not to have it today. [Applause.]
Prescription drugs save lives, and they improve the quality
of life for millions of Americans. But when medication is
unaffordable, we fail our sick and elderly. And when those in
need have to choose between buying food or paying for a
prescription drug, we are failing our seniors. And when older
adults have to rely on family members to pay their drug bills,
we fail both seniors and their families.
I hear these concerns everywhere I go, and I receive
countless letters and e-mails from people all over Missouri on
this subject. And it troubles me when I think about the tough
decisions that our seniors, living on fixed incomes, have to
make every day--choices between medicine and food, between
medicine and rent, and medicine and heat. Sad and difficult
decisions are being made every day in homes all across
Missouri.
I want to create a prescription drug benefit as part of
Medicare and have supported setting aside funds in the Federal
budget for this purpose. We are still working out the difficult
details, but we have agreed on a number of principles that a
drug benefit should meet. And I want to share some of those
with you that I believe in very strongly.
First, a benefit should be universal. Everyone that is
enrolled in Medicare should be eligible to receive the benefit.
[Applause.]
Second, the benefit should be voluntary. Seniors should
have a choice as to whether they want to participate or not.
Third, the benefit should be affordable.
Fourth, the benefit should be stable. We want to create a
benefit that provides coverage for a long time, not one that is
constantly changing.
Fifth, the benefit should be available. It should not
matter if you live in an urban or suburban or rural setting.
You should be able to get prescription drug coverage wherever
you live.
Finally, the benefit should be part of Medicare. We don't
need to create a whole new system. Medicare is a program that
works, and it is one that our seniors trust. We in the Senate
need to understand what seniors need, the extent of the
problem, and what the consequences are if we fail to act.
We are privileged today to have three panels of speakers
here to address some of these questions.
The first panel is made up of Missouri seniors who will be
speaking about their experiences in struggling to meet the
increasing cost of drugs.
The second panel is comprised of representatives of
organizations that advocate on behalf of Missouri's seniors,
and they will be sharing with us their recommendations on how
to craft a Medicare prescription drug benefit.
The third panel will provide a look at the scope of the
problem. They will also examine the impact of drug prices on
the health of seniors and on health care in general.
I look forward to hearing the testimony and to learning
from their experiences, and I hope our audience will gain a
greater understanding of this complex and costly health problem
as well.
Now I would like to introduce the first panel of speakers,
but before I do so, I probably should introduce someone else,
who is in the audience who will not be participating, and that
is a woman by the name of Doe Ruengert. She is here from
Jefferson City, and she has submitted written testimony for the
record on her care for her 91-year-old aunt, Dorothy Creighton.
Mrs. Ruengert is a nurse, and she has cared for her aunt for a
number of years in her home because her aunt was unable to live
alone because of the cost of her prescription drugs. Mrs.
Creighton pays upward to $800 a month just for prescription
drug costs alone. So I appreciate her being here, and I will be
referring to her testimony again later on.
Our first witness is Norma Muhleman from Florissant. If the
three of you, as I call your names, if you would take your
seats up here? She wrote to me back in March. Nice to have the
chance to meet you today. You wrote to me about your husband
and about your costs for your bills. Norma and her husband have
lived in Florissant for 40 years. They were in business
together for the past 13 years before he retired. She is the
mother of a son and daughter and has three grandchildren. So we
appreciate your being here today.
The second gentleman is Mr. L.C. Lakes from St. Louis City.
Mr. Lakes is a retired welder. He is a member of the Friendly
Temple Baptist Church. He is on the committee there that builds
housing for senior citizens. And he also volunteers in the
Caring Communities Program and works in the 22nd Ward to help
provide a safe neighborhood there. So we welcome you as well.
Then our final witness on this panel comes from Poplar
Bluff, Mrs. Edna Sowells. Is she here today? OK. Welcome. She
is the former head cook at the Lucy Lee Hospital and has been
very active in her church and community.
So I will begin by turning our floor over to our first
witness, Mrs. Muhleman. Welcome.
STATEMENT OF NORMA MUHLEMAN, FLORISSANT, MO
Ms. Muhleman. Thank you. Good morning, Senator Carnahan,
and everyone else. I appreciate very much the opportunity to
speak to you about my concerns about a prescription drug plan.
My husband and I are Medicare enrollees as well as we have
Medigap plans to supplement Parts A and B of Medicare. But none
of these plans pay for prescription drugs, dental, nor
eyeglasses.
My husband has been on oxygen 24 hours per day for a few
years because of his emphysema, heart problems, and other
things that entail his having to use very expensive
prescriptions. We do not have prescription insurance on any of
our plans, and in checking the Medigap policies that would
allow us coverage, if they accepted us with our medical
problems, they have a cap or a limit on prescriptions that
would only pay for a proverbial drop in the bucket on our cost
of prescriptions, especially after paying the higher rate for
prescription coverage. It would not help us at all.
We have investigated everything we have ever heard about,
and there does not seem to be any plan that we could get paying
for it ourselves that would help.
Two years ago, our prescriptions and out-of-pocket expenses
were around $5,500. Last year, it was approximately $8,000 out
of our own pockets. As you can see, it increases constantly
with the cost of drugs, et cetera.
We have thought for a long time that Congress should
provide something to help people like us, of which there are
many around us with the same problems, such as insurance where
we could pay the premiums but enable us to have a copayment,
like the large companies in the country provide for their
employees.
We are very satisfied with Medicare as it is and hope it is
not changed, other than to add a prescription drug plan that
will pay for our prescriptions, with us paying a premium and a
small copayment on our part.
Medicare has been tested many times with us, as my husband
has been in the hospital many times, and we are thankful for
its good coverage, along with our Medigap supplemental plans we
have, but the drug costs are killing us.
We have worked hard and live economically. My husband
worked as long as his health permitted and was 72 years old
before he had to give up his work. Even then, while he was
still working, he was on oxygen at night after working hours.
We are hoping for something that allows us to pay premiums, as
we do Parts A and B on Medicare, for our prescriptions. We are
not asking for something free, but feel we older middle-class
citizens deserve this opportunity.
Thank you.
[The prepared statement of Norma Muhleman follows:
[GRAPHIC] [TIFF OMITTED] T5461.001
[GRAPHIC] [TIFF OMITTED] T5461.002
Senator Carnahan. Thank you, Mrs. Muhleman. I appreciate
your sharing that story with me. I had the opportunity to care
for my father for 7\1/2\ years, and he had emphysema and
diabetes and asthma. And so I can understand some of your
concerns and some of the things that you have been going
through.
Let's see. Mrs. Sowells, if you would?
Ms. Sowells. Do I push this button here?
Senator Carnahan. I believe that is correct, yes.
STATEMENT OF EDNA SOWELLS, POPLAR BLUFF, MO
Ms. Sowells. Good morning. My name is Edna Sowells. I am
from Poplar Bluff, MO. Thank you, Senator Carnahan, for giving
me the opportunity to testify this morning to millions of
people like me for some sort of prescription drug relief.
For a number of years, I was a head cook at Lucy Lee
Hospital in Poplar Bluff, MO. I have also been very active in
my community, church, and helping neighbors in time of need,
and babysitting and cooking food. I have been happily married
for 44 years and have three wonderful, precious children.
Several years ago, I was diagnosed with diabetes I, I was
able to control that by taking a pill and monitoring my diet.
About 14 years ago, I lost a massive amount of blood that led
to a radical surgery because I had only two pints of blood left
in me. After this surgery, I tried to go back to work but found
it impossible; therefore, I went on Social Security disability
for stiffness on my right torso and my left foot and leg by a
hysterectomy and surgery to remove a cyst. Since this surgery,
my diabetes has now progressed and forced me to take two shots
a day, two pills a day.
When I became disabled, not only the source of my income, a
Social Security disability check, I also received medical help
with my doctors' and hospital bills. However, I have no help to
pay for my monthly prescription drugs. I pay at least $200 or
more for my prescription drugs alone. For example, this month
of August, I paid $206 at just one drugstore for my hives, my
blood pressure, my diabetes, my nerves, my cholesterol, my acid
reflux, and this in addition to the payments I have to make for
my equipment. For example, last month, at a different drugstore
I spent $120 for test strips, $13 for needles and syringes,
because I got them on sale. I have to buy new equipment at
least every other month and a half. However, sometimes money is
so tight that I re-use the needle and syringes and alcohol
swabs after thoroughly cleansing and contacting my doctor for
samples or even resort to cutting pills in half in order to
save a few dollars a month.
Because of this high prescription drug cost, I have to
sacrifice several things that I would love to do, I would love
to have the opportunity to do. I am unable to go out to dinner
with my husband to a nice place and can no longer donate any
money to my church or buy my kids and grandchildren gifts.
These are all things that I used to do and enjoy before I
became sick. I never dreamed that this would happen to me or
that it would be difficult to survive once I stopped working.
Senator Carnahan, I was an orphan from the age of 10, and I
learned at a young age how to be thrifty and efficient. I
taught myself how to cook and sew in order to survive. However,
things are really tight, and I am unable to make ends meet. I
would really benefit from some sort of prescription drug
relief. Please work hard to address my and every other senior's
needs for the prescription drug benefit.
Thank you very much for the opportunity to speak today, and
I appreciate your kindness and concern.
[The prepared statement of Edna Sowells follows:]
[GRAPHIC] [TIFF OMITTED] T5461.003
[GRAPHIC] [TIFF OMITTED] T5461.004
[GRAPHIC] [TIFF OMITTED] T5461.005
[GRAPHIC] [TIFF OMITTED] T5461.006
[GRAPHIC] [TIFF OMITTED] T5461.007
Senator Carnahan. Thank you, Mrs. Sowells. I think your
testimony--sometimes we focus just on seniors, and we don't
always focus on those who have disabilities as well, because
that cuts back on the amount they are able to earn, and it also
increases what they have to have as far as equipment and
prescription drugs. So I appreciate your telling us about that.
Mr. Lakes.
STATEMENT OF L.C. LAKES, ST. LOUIS, MO
Mr. Lakes. Yes, good morning, Senator Carnahan.
Senator Carnahan. Could you get closer to the microphone?
Thank you.
Mr. Lakes. For the record, my name is L.C. Lakes, a
resident of the city of St. Louis, MO, in the 22nd Ward. I was
born on November 20, 1932. I am currently retired. In my life,
I have worked in several jobs, most notable working as a welder
for 27 years. I am currently Captain of Block Unit 294, and an
active member of several neighborhood initiatives aimed at
improving the quality of life for the residents of our
community. I am a member of Friendly Temple Baptist Church in
St. Louis. I work on our church committee to build houses for
the senior citizens.
I was also involved in the successful effort to locate a
police substation in our neighborhood to help us fight the
problems of drug abuse and crime in the 22nd Ward. I actually
worked with the police officers, the aldermen, and other public
officials in the effort to demolish the nuisance properties
that are used to sell drugs. I have also volunteered with the
Caring Community Program under the direction of Mr. Khatib
Waheed in St. Louis to provide fun and safe activities for our
youth.
I sincerely thank the committee for the opportunity to
appear before them to discuss the critical issues of
prescription drug coverage for senior citizens. It is an issue
that either affects now or it will affect everyone in our
Nation. Everyone in the United States is going to get old
sooner or later. If you have a little luck, you will get to be
an old man like me. But you are going to have to have a little
luck.
My wife and I are now both retired and living on a fixed
income. My wife receives a pension from St. John's Hospital
where she worked for 28 years. She received Social Security
benefits after she retired from St. John's. My wife was part of
the HMO that the hospital provided for employees. While she was
covered, she had to pay $200 every month to stay in the HMO. I
also received coverage on her plan for a monthly fee.
Since my wife required so many different kinds of medicine,
she was put out of the HMO. Since then she has been forced to
seek a private insurance plan due to the high cost of our
prescription drugs, especially for her heart condition. She
spends several hundred dollars monthly for this medication. I
was also put out of the plan because my wife lost her coverage.
I pay the AARP $110 every month for supplemental hospital
coverage.
Since Medicare only pays 80 percent of the cost of any
hospital stay, the AARP pays the other 20 percent. Again, this
only covers a hospital stay, not the cost of medicine. If it
were not for this coverage, my wife and I would have nothing.
For us in a time of bad health, my wife and I both require
several prescription drugs each month to maintain our health. I
am on four prescriptions. My wife has been placed on nine by
her doctor. I must spend $33 a month for--some of these
medicines here I am unable to pronounce the name of them, but
we got some things here--but I will go on to the others. To
treat my high blood pressure and my borderline diabetes
requires two medicines, Glucotrol and Glucophage, I think it
is. They cost $35 for 30 pills. My doctor also prescribes
Baycol for my high cholesterol, which has since been taken off
the market. My wife's situation is even more serious. She must
take nine different kinds of medicine, her gout prescription.
Senator, here are some more of the medicines here. I am not
a doctor, so I can't pronounce a lot of these. But, anyway, the
cost of this medicine is $10 for 20 tablets. The prescription
for the heart condition costs $100 for 30 tablets. Due to their
high cost, we can only afford to buy 15 at a time, half those
what the doctor prescribes. Her high blood pressure medication
costs $80 for 60 pills. Since she has to take two every day,
she also needs a second blood pressure medicine which costs $30
a month. The complications from her blood pressure also forced
her to take a $30-a-month prescription to remove water and
fluid from around her heart and a $35 prescription for another
one of them, Senator.
Her doctor also prescribes 60 potassium tablets at $49 a
month. She also needs 120 tablets a month for Cuminid, a blood
thinner, I believe that is. But she can only afford 30 at a
time. Her Glucophage prescription for diabetes costs $45 for 60
tablets and $40 for her prescription of Glyburide, or whatever
that is.
We must pay for all of this medicine I just read to you on
a fixed retirement income of $886 a month for me, $730 a month
for my wife. After requiring Medicare deduction of $50 each,
together we have to survive on about $1,600 a month, and for
that we must pay our electric bill, gas bill, water, sewer,
food, and other expenses. If it wasn't for my wife's history at
St. John's and our friendship with the doctors and nurses, we
wouldn't be able to get the free samples that we need from
them, which keeps the medicine costs where they are now.
Even now we have to cut back on the medicine that my wife
needs because we just don't have the money. I urge you, Senator
Carnahan, to do what you can to help us older Americans with a
prescription drug benefit. You can do a great deal to make our
lives easier. No one should have to choose between the medicine
they need to live and food to eat, we senior citizens need your
help.
Again, thank you for the opportunity to come before you.
Thank you for hearing my concerns and those of other seniors in
my community. Thank you.
[The prepared statement of L.C. Lakes follows:]
[GRAPHIC] [TIFF OMITTED] T5461.008
[GRAPHIC] [TIFF OMITTED] T5461.009
[GRAPHIC] [TIFF OMITTED] T5461.010
[GRAPHIC] [TIFF OMITTED] T5461.011
[GRAPHIC] [TIFF OMITTED] T5461.012
[GRAPHIC] [TIFF OMITTED] T5461.013
Senator Carnahan. Thank you, Mr. Lakes. I notice you
indicated that it takes a little bit of luck to age
successfully.
Mr. Lakes. Yes, ma'am.
Senator Carnahan. But we want to try to eliminate the
necessity for luck and put a little more certainty into aging,
and having a prescription drug benefit would certainly help to
do that.
Mr. Lakes. Thank you, ma'am.
Senator Carnahan. I would like to go to the questioning now
of our panelists here for a minute. I can tell that you are
making some budget decisions as you look to your costs, and
that perhaps there are some sacrifices you are having to make.
I can tell that you are already trying to--I believe, Mr.
Lakes, you mentioned that you use samples sometimes that your--
--
Mr. Lakes. The doctors sometimes have. And if I may,
Senator, sometimes when the medicine gets to selling, they
don't have samples. They stop giving them out once they get
going. And then the doctor don't have them. But it is mighty
nice when the doctor gives them whenever he can.
Senator Carnahan. Then I believe it was, Mrs. Sowells, you
indicated that sometimes you also use samples and that you
halve the pill sometimes in order to make it go farther. But I
am just wondering. You are making some adjustments in your
medicines. What adjustments are you making in your budget? What
is it you are not able to do as a result of this? What kind of
sacrifices of priorities are you having?
Ms. Sowells. Well, I can no longer be no help to my family.
I can't do anything for my church activities. I can't do
anything for my grandchildren. And when it comes right--I don't
do very much for my husband, and when it comes right down to
me, you just might say we do without to stretch and make it.
And I was telling Jason and Rich that we was with, two very
nice men--appreciate their help--you have to learn to live
within your income. If you keep going out of your income, you
are going to really be in deep trouble. And I know I do a lot
of things that I shouldn't do that the doctor don't want me to
do, but you have to do in order to make it. They want you to
use a needle and syringe one time. I can't do that. I can't
make it. Most of the time they run $20 a month. And I re-use
the needle and syringes after I thoroughly clean them. And on
my medicines, sometimes when it gets so tight, I figure a half
a dose is better than no dose. So I will put it in half in
order to stretch it out.
Senator Carnahan. Would any of the others like to comment?
Mrs. Muhleman----
Mr. Lakes. I would like to say that--and me and my wife----
Senator Carnahan. Could you speak a little closer to the
microphone?
Mr. Lakes. Yes. Me and my wife's situation comes that
sometimes we have to go to some of the city programs like
energy and things like that to get some of our bills paid, like
lights and gas. At this time of month we go and try to get help
from the energy people to help us out there, and sometimes we
were able to do that. And right now it is kind of hard since we
got a new President to get that done. You know, they don't have
no money half the time, they say, and if they ain't got it,
they can't give it.
When wintertime come, we go to the gas--go back to the
problem of gas, and me and my wife have that problem, you know.
As she said, do the best we can. That is all we can do. But it
is a long way from where we should be. I worked hard all--it
ain't like, again, we are asking for something for nothing. I
worked for some 30 years and just think it is no more than fair
to try to give us some help.
Senator Carnahan. Mrs. Muhleman.
Ms. Muhleman. It takes a lot of ingenuity, as Mr. Lakes
says, with increasing gas prices, gasoline for the cars and
also for heating, and for air conditioning. And it really keeps
you busy, you know, juggling the budget. And sometimes it does
have to come out of savings whether you really want to or not,
because my husband's medicines are very expensive. They are, I
guess, some of the most expensive that a person has to have for
his condition. And I have health problems, too.
Senator Carnahan. Have any of you tried to get insurance to
cover your drug prescriptions? I think you mentioned, Mrs.
Sowells, that you had attempted to do this.
Ms. Sowells. I wasn't able to do this until--my husband
does it for me. I cannot do it. He bought me a supplement
insurance for the 100 percent deductible and 20 percent
copayment. But it does nothing for drugs. And that runs him
over $1,000, $1,200 a year for this insurance, which right at
this present I am still paying on hospital bills that I had 3
and 4 years back that I am still paying on monthly besides
everything else.
But I was not able to get insurance until then. Everybody
would turn me down, or it would either be so high, we could not
afford it. There was no way that we could get it and pay for
it.
Ms. Muhleman. Also, they will not take a lot of people that
have pre-existing conditions.
Ms. Sowells. That is right. That is right.
Ms. Muhleman. We have tried many times.
Senator Carnahan. So you have tried, but you didn't find
anything that was attractive.
Ms. Muhleman. Nothing. And the cap is usually $500, and
that is nothing--for us, at least.
Senator Carnahan. Mr. Lakes, did you----
Mr. Lakes. Yes, ma'am. I did want to say just what she just
made the statement, that my wife, being an HMO, she jumped from
one to the other on account of $500 is the limit there. And a
couple of months at the most, she's out of that $500 due to her
condition and heart trouble. Some of the medicines cost about
$3 a pill. It is something she got to have, you know, and----
Senator Carnahan. One of the issues that we are going over
in Washington is whether or not a prescription drug benefit
should be a part of Medicare or whether it should be covered by
private insurers. Do you have any opinions on that? I see you
shaking your head over here, Ms. Sowells.
Ms. Sowells. I would rather have Medicare than insurance,
like I was talking about the insurance that my husband got, it
was through his cousin that found this company to insure me, or
I probably wouldn't be insured today. And as I said when we
first started, it was about $1,000 for a little over a year,
but now then it has gone up to $1,250 a year to insure me for
the $100 deductible and the 20 percent copayment. But, at that,
it still does not cover none of the prescription drugs or
anything that I have to have, like my expensive machines. And I
guess Rich got a little--looked at me a little funny, but I
kept saying, ``Do you lock your van? Do you keep this locked?
Do you keep that locked?'' Because I have got all my medical
supplies with me that I had to bring, and like I told him, I
have things that I cannot replace. They are too expensive. My
machine monitor and my--well, all my pills. There for a while I
was carrying them in my purse, and I was tearing up my purse.
And so I had to buy an extra bag in order to put all my
medication in that bag, you know, to move it around. And I told
them it is like going somewhere, it is just like moving,
picking everything up and going.
But, no, I would rather to have it on Medicare than any
insurance company.
Senator Carnahan. You just feel a little more confident
being under Medicare.
Ms. Sowells. Yes, I do, because I feel like they wouldn't
turn you down as quick as what an insurance company might turn
you down on something that you would really need that they
think, well, you really don't need that. Even if the doctor
says you need it, they might think you don't need it.
Senator Carnahan. How do you feel?
Ms. Muhleman. I think it should be with Medicare and us pay
a premium like we do Parts A and B. I am very much for that.
Ms. Sowells. Yes.
Mr. Lakes. So I am. She speaks for me, too.
Senator Carnahan. OK. Very good. Well, as we mentioned
earlier, we want to try to make this to be a voluntary benefit.
But in order for it to work, we are going to have to have some
features in it that are attractive to people. If we have to
place limits on what we offer, what would you be willing to
accept in terms of copay, deductibles, premiums, and so forth?
What do you feel like you could afford to accept?
Ms. Sowells. Anything would beat what we are doing right
now.
Senator Carnahan. OK. But, I mean, how much do you feel
would be an acceptable amount that you could afford, say, a
month?
Ms. Sowells. Well, if it would cover most of the drugs,
even if we would have to pay a small amount, if it was
something like Medicare, if we would have to pay a premium like
Medicare in order to get the drug prescriptions, it would pay
us to do that. It would be well worth it of what we are already
paying. And then if we had to pay a little bit on each
prescription, that wouldn't be----
Senator Carnahan. So you don't object to a copay? You would
be willing for a copay?
Ms. Sowells. If it is necessary, yes.
Senator Carnahan. And some sort of deductible feature as
well?
Ms. Sowells. Such as?
Senator Carnahan. Oh, like a $250 deductible before----
Ms. Sowells. In other words, you would have to be out the
$250 before it would kick in?
Senator Carnahan. Right.
Ms. Sowells. Yes, ma'am. Yes, ma'am.
Senator Carnahan. Mrs. Muhleman, that is sort of----
Ms. Muhleman. That would be good.
Senator Carnahan. You would be willing to pay a deductible?
Ms. Muhleman. A copayment and a deductible would be OK.
Mr. Lakes. Well, I don't agree with the $200 deductible.
You know, I just don't agree.
Senator Carnahan. You think that is too high?
Mr. Lakes. Yes, ma'am, I do. I think it is much too high.
See, if you go with the HMOs, if they would stand still instead
of the 30 months, they have maybe 5 months and 6 months, take a
whole year in there, I would have thought it would be good. But
if you are using a lot of medicine with an HMO, $500 is only a
little bit, even though you pay $10 for that copayment, it is
fine, but it don't last. So if you got to pay $200 or $300, or
whatever, that is too much. I don't agree with that. I don't
mind paying something, but----
Senator Carnahan. And this question might cause you to
range out a little bit and think in terms of some of the
friends that you know who have similar problems. Do you think
that what you are going through is typical of the senior
community?
Mr. Lakes. Yes.
Ms. Sowells. Absolutely.
Senator Carnahan. Mrs. Muhleman.
Ms. Muhleman. Yes. In the breathing centers and places
where my doctor has to go, and the hospitals, we find that this
is very common.
Senator Carnahan. In what way?
Ms. Muhleman. Well, the high prescriptions, the expense,
all the--it is wonderful to have all these medicines, but they
are very expensive. Just terrible. And they keep going up all
the time. So it is a very common thing. Everyone talks about
it.
Senator Carnahan. Among friends, OK.
Ms. Sowells. When one drug fluctuates $10 or $15 a month,
it just nearly chokes you.
Senator Carnahan. So this happens commonly, that the drug
would fluctuate and raise that much in a month's time?
Ms. Sowells. Well, that is what my pharmacists tell me. At
one time I had one pill that jumped up $12, and I called him, I
said, Oh, I can't handle this. And he said, ``Well we don't
want to do it, but,'' he said, ``it's getting to that. So we
have to do it.'' And I said, ``Well, just don't fill it.''
Because it was already 30-some dollars, and then when they add
$12 more to it, that is 40-something. And when you have got
four or five that runs you 30 and 40 or close to $50 a month--
and that is not--like I said, that is not all that you get.
That is just part of what you get. You just can't do it.
Senator Carnahan. What about your friends? Do you have
friends who are having similar situations?
Ms. Sowells. Yes. And another thing that I talked to Jason
about and Rich about, I talked to my pastor and some of my
senior citizens at my church about this, and they said, ``Well,
it sounds like to me that if they would do this, people that
are not taking medicine or as sick as you are would be paying
for your drugs.'' And I said, ``No, that is not what they told
me.'' I said they reassured me that they had money put back for
this and that it wouldn't be like that, it would be like
Medicare. You either get Medicare or not have Medicare. And I
said that is what they told me. And I said I believe that is
the way it is.
It would be hard to, like he said, cough up the $200, $250,
but it wouldn't be anything--it wouldn't be worse than what we
are doing now. We could more apt to do that than keep doing
this every month and every month and every month to where you--
the quality of life is not enjoyable. You just dread--every day
you dread what you have to do to live with your medicine. I
don't know if anybody takes shots, but it is not enjoyable. And
it was one of the hardest things I ever had to learn to cope
with.
Senator Carnahan. Mr. Lakes.
Mr. Lakes. Yes, ma'am. Senator, I would like also just to--
sometime your medicine that you may be taking--I will just name
blood pressure medicine, for instance. It may stop working, and
then the doctor prescribes another medicine. Sometime there may
be two. In my case it was two prescriptions instead of that one
I had before. You know, I was taking--Pezotag was one, and now
I am taking two more that is supposedly going to do the same
thing, but I take two medicines, two prescriptions, which costs
two pieces of money, in the neighborhood of $35 or so for 30
pills. So that is a concern to me. Medicine doesn't always
work, and when it stops working, they go to another one.
Senator Carnahan. I have one final question, and if you
would each address this question. Did you have any idea that
your retirement, what we often think of as our golden years,
would be like this?
Ms. Sowells. No, not at all. Not at all. I tell my children
sometimes life is not worth living, and they would say,
``Mother, don't talk like that. Don't talk like that. We are
not ready to give you up.'' And I said, ``Well, when you can't
live a quality of life, you know''--and sometimes it is
depressing. It is heart-breaking. It is aggravating. It is
frustrating. And I was talking about this one drug that I told
the druggist not to refill. I was already paying--it was a
nerve pill. My nerves was really bad, and the doctor said I was
right at a nervous breakdown when I quit work. And he had me on
four Xanax pills a day. And I was paying $60 a month, and it
got so bad, I went into him, and I said, ``Do not refill that
prescription anymore.'' And he said, ``Just a minute.'' And he
went to the phone, and he called the pharmaceutical, that makes
the medicine, and he was telling them about me, and I know they
had asked him, ``Well, does she really need it?'' He said,
``Yes, or I wouldn't be calling.'' Here this medicine was
already 60-some dollars a month, and they said, ``Let her have
it at cost.'' They started charging me $20 for the medicine.
That is what it took them to make my medicine, was $20, which I
had been paying 60--over 60-some dollars a month for this one
pill.
Senator Carnahan. Mr. Lakes.
Mr. Lakes. Senator, what I didn't anticipate when I was
younger, that I was going to have these problems when I got
older, you know, arthritis and all these other things.
Senator Carnahan. You were going to enjoy your retirement.
Mr. Lakes. Yes. But, unfortunately, I got old--I am glad I
am living, though. [Laughter.]
But it just come up, you know, one thing after another. I
thank God that I haven't got worse health, but we do need help,
and we are--I watch you a lot on the radio and what have you--
on the television, I should say, and I will say this: You will
get my vote all the time. I will be working hard for you.
[Laughter.]
Senator Carnahan. Mrs. Muhleman.
Ms. Muhleman. My husband has a lot of infections that he
takes a lot of antibiotics constantly, and, of course, they are
very expensive. And he has one medicine that goes in his
nebulizer, or breathing machine, that a month's supply costs
over $200. And that is just for his breathing machine. So these
medicines are extremely expensive.
Senator Carnahan [continuing.] told are very heart-rending.
They make us all the more determined to do something and to
help, and I appreciate your being here very much.
We will take a 5-minute break at this time.
Mr. Lakes. Thank you for having us, Senator.
Ms. Sowells. Thank you.
Ms. Muhleman. Thank you. [Recess.]
Senator Carnahan. Could I have your attention? We will get
started with our second panel. Our second panel will feature
advocates for seniors in Missouri who have been working to
relieve the burden of high prescription drug costs.
Robert Schmalfeld is an AARP volunteer congressional
district coordinator from St. Louis. Mr. Schmalfeld is a
retired lieutenant from the Navy and a former administrator at
Oklahoma State University and more recently at University of
Missouri in St. Louis. We welcome you today, Mr. Schmalfeld.
Mr. Schmalfeld. Thank you.
Senator Carnahan. Ken Bougeno is the first vice president
of the Missouri Council of Senior Citizens. Mr. Bougeno is a
retired Chrysler employee and has been very active in his local
UAW chapter.
And, finally, Ann Steele, welcome. She is the advocacy
chair of the Older Women's League. Mrs. Steele is a retired
educator. She taught in the Rittenour School District for 28
years, retiring in 1987, and she has been involved with the
Older Women's League for over 10 years.
We are very privileged to have you all here today, and your
written testimony will be included in the written record in its
entirety. But if you would please limit your prepared remarks
to 5 minutes today, that would be very helpful.
So we will get started with Mr. Schmalfeld.
STATEMENT OF ROBERT SCHMALFELD, AARP VOLUNTEER CONGRESSIONAL
DISTRICT COORDINATOR, ST. LOUIS, MO
Mr. Schmalfeld. Thank you, Senator. I am Robert Schmalfeld,
an AARP volunteer, currently serving as congressional district
coordinator from the city of St. Louis. I appreciate the
opportunity to appear here today to discuss the need for
Medicare prescription drug coverage.
In the 36 years since the Medicare program began,
prescription drugs have become essential to the treatment and
prevention of disease. The lack of prescription drug coverage
in Medicare has become one of the programs biggest gaps,
leading beneficiaries vulnerable to substantial costs. Further
exacerbating the problem is the fact that other sources of drug
coverage for older Americans are inadequate and undependable.
For instance, the number of employers offering retiree
health coverage has seriously declined. In the 1980's, an
estimated 60 to 70 percent of large employers offered retiree
health benefits. By 1993, that had dropped to 40 percent, and
in 2000, it was only 24 percent for future retirees. Medigap
plans provide prescription drug coverage in only three of the
standard ten plans, and these plans are expensive and place
limits on the benefit.
Medicare+Choice plans are dropping out of Medicare,
increasing premiums, or reducing benefits. As a result of
inadequate and costly coverage, one-third of Medicare
beneficiaries do not have prescription drug coverage, and this
figure obscures the fact that only 53 percent of beneficiaries
have prescription drug coverage for the entire year.
Prescription drug coverage in Medicare would improve
quality of care, reduce unnecessary hospitalization, and offer
the potential to reduce the risk of drug interactions. That is
why AARP is committed to creating a Medicare prescription drug
benefit. In particular, AARP believes that Medicare's benefit
package must be modernized to keep up with advances in
medicine.
A Medicare prescription drug benefit must be available to
all Medicare beneficiaries. The benefit needs to be affordable
to assure a healthy risk pool. This means that healthy and low-
cost beneficiaries must choose to enroll in the benefit in
addition to those who already have high drug costs.
Prescription drugs should be part of Medicare's defined
benefit package set in law. It is critical that beneficiaries
understand what is included in their benefit and that they have
dependable and stable prescription drug coverage. The benefit
should provide protection against catastrophic expenses. The
benefit must include additional subsidies for low-income
beneficiaries to protect them from unaffordable costs and
assure that they have access to the benefit. The benefit must
be financed in a fiscally responsible manner that is both
adequate and stable. The benefit should be voluntary so that
beneficiaries are able to keep the coverage that they currently
have, if they choose to do so.
A new prescription drug benefit should also be part of a
strong and more effective Medicare program. Senator Carnahan,
we commend you for holding this hearing today to draw attention
to the need for Medicare prescription drug coverage. AARP
stands ready to work with you and your colleagues to enact a
meaningful benefit.
Thank you.
[The prepared statement of Mr. Schmalfeld follows:]
[GRAPHIC] [TIFF OMITTED] T5461.014
[GRAPHIC] [TIFF OMITTED] T5461.015
[GRAPHIC] [TIFF OMITTED] T5461.016
[GRAPHIC] [TIFF OMITTED] T5461.017
[GRAPHIC] [TIFF OMITTED] T5461.018
[GRAPHIC] [TIFF OMITTED] T5461.019
[GRAPHIC] [TIFF OMITTED] T5461.020
Senator Carnahan. Thank you very much.
I might ask you some questions right now before we move on
to our other panelists. I certainly appreciate the fact that
AARP has been such a strong advocate for a prescription drug
benefit, and we appreciate all that they are doing in that
area.
You did mention a trend in your testimony. You said that
employers and Medicare HMOs and other insurers are cutting
back. Is this going to put--when they do this, do you think
this is going to put a greater burden on Medicare
beneficiaries? And do you think that this trend will continue?
And as a result, will it cause Congress to have to heighten
their interest in this topic and their need to do something?
Mr. Schmalfeld. I believe that the need to have a
prescription drug coverage in Medicare will increase as the
number of employers continues to go down in terms of covering
retiree benefits. There will be more and more people without
the prescription benefit, and there will be an even greater
need across the board for Medicare benefit--excuse me, a
prescription drug benefit in Medicare.
If you think about it, the last 10 years there has been a
50-percent decline in the rate of coverage for those persons
who used to be able to rely on having a prescription benefit in
retirement.
I am not sure whether I have completely responded to your
question. I hope so.
Senator Carnahan. Thank you.
Let's go on and hear from Mr. Bougeno, and then we will
follow up with some questions as well.
STATEMENT OF KEN BOUGENO, FIRST VICE PRESIDENT, MISSOURI
COUNCIL OF SENIOR CITIZENS
Mr. Bougeno. Thank you, Senator Carnahan. My name is Ken
Bougeno. I am the first vice president of the Missouri Council
of Senior Citizens. I am here on behalf of them today. We also
are an affiliate of the Alliance of Retired Americans.
As a retiree of UAW Local 136, I feel very lucky that at
the present time we have a copay prescription program and I do
not have to make the choice between getting my expensive
prescription filled or eating. With each negotiation, we are
losing a little piece of our benefits, and the day could come
when the corporation will take away that benefit altogether.
There are 13 million senior citizens and disabled people
who do not have prescription drug coverage. Older Americans
depend on prescription drugs, and for many, drugs represent the
difference between life and death. Seniors spend 42 cents of
every dollar that is spent on prescription drugs, and they are
the ones who can afford it the least.
As an officer of the Missouri Council of Senior Citizens, I
can say that we support the commitment of the Alliance for
Retired Americans in lobbying for Congress to enact a
universal, comprehensive, and affordable prescription drug
benefit under Medicare.
Seniors need an affordable copay prescription program that
will protect them from increasingly expensive drugs, and
employers should be provided with incentives to keep the
prescription copay and even expand on it in their own
corporations.
We have got to put some kind of control as well on
pharmaceutical prices. They have just skyrocketed on us.
[Applause.]
Senator, I want to thank you for the opportunity to come
here today, and on behalf of the Missouri Council of Senior
Citizens, we will support you in all your efforts, and anything
we can do to help you, please call.
[The prepared statement of Mr. Bougeno follows:]
[GRAPHIC] [TIFF OMITTED] T5461.021
Senator Carnahan. Thank you very much.
Ms. Steele.
STATEMENT OF ANNE STEELE, ADVOCACY CHAIR, OLDER WOMEN'S LEAGUE,
ST. LOUIS, MO
Ms. Steele. My name is Anne Steele. I am the advocacy
chairperson for the Older Women's League, the Gateway Chapter,
which is in St. Louis, and I have entitled my presentation to
you today ``Prescription for Change.'' I want to begin my
remarks by telling you about a friend of mine whose name is
Olivia, and I hope she will be able to join us a little later
on.
Olivia has been with us for 21 years and has worked
ceaselessly to develop a grass-roots organization to focus
solely on issues unique to women as they age. She strives to
improve the status and quality of life for midlife and older
women. But when prospective members ask me how old you have to
be to get into this organization, I reply, ``39 or over, or
ever hope to be.'' And we even take men.
We work together to bring about these following goals, our
organizational priorities: health care, and we have had a lot
of explanation of that; economic security; and quality of life.
Those are the three issues that we support legislation, we work
on those, so on and so forth.
Now, I want to talk about why are so many older women poor.
By far, more retired women are much less able to support
themselves, to support themselves with any degree of quality of
life than men. Why is that?
When I was a kid growing up, there were three professions I
could go into, and that was a secretary, a nurse, or a teacher.
And I ended up being the teacher. But women's professions have
changed a little bit, but since these were women's professions,
the pay was low.
Women now are free to become trained in almost any field
that they have the interest, aptitude, and opportunity. But
just think, when the former man, Mr. Lakes, he said, ``You have
to have a little luck.'' And that is what opportunity is, too.
So I believe that you have to have that combination. It
just doesn't come out and lay itself at your feet because you
have aptitude or interest. It is that opportunity that really
makes a difference in what you and I do with our lives, whether
you are 80 or whether you are 8.
In June 1963, the historic Equal Pay Act was signed into
law after a protracted 18-year battle. Thirty-eight years
later--that is now--women have gained 13 cents in the pay gap.
Instead of 59 cents for every dollar earned by men in 1963, we
now earn 72 cents on the dollar. OWL has long called for the
full enforcement of wage and age discrimination laws, as well
as a speedy closure to the widening gap separating men's and
women's wages.
Since Social Security monthly benefits are based on a
worker's wage history, women who earn less become retirees who
have less to live on. Older women depend most heavily on Social
Security as a financial foundation. The poverty rate for women
65 and older is almost twice that of men, 12 percent vs. 7
percent. The average older women lives on $15,615 a year, vs.
an average of $29,171 for her male counterparts. And women live
an average of 6 years longer to stretch this money for some
quality of life.
For the women of color, the pay gap is magnified. African
American women earn 65 cents and Latinas only 52 cents for
every dollar earned by a white male. This cycle of low wages
continues into retirement where African American and Hispanic
older women have almost 3 times the rate of poverty as white
women.
Savings are very hard to manage when you don't make enough
money to keep body and soul together, so the third leg of that
retirement stool is often denied women because of their lack of
income all through their lives.
I want to refer a little bit to the ERA because we are
trying to get that passed in the State of Missouri, and we are
not succeeding.
It started back the days when our Constitution was written,
this discrimination of women. When Abigail wrote to John and
said, ``Remember the ladies,'' he wrote back and said, ``Depend
upon it. We know better than to repeal our masculine system.
I'd rather give this up. I hope General Washington and all our
brave heroes will fight against it,'' meaning putting women in
the Constitution. And so it was.
[The prepared statement of Ms. Steele follows:]
[GRAPHIC] [TIFF OMITTED] T5461.022
[GRAPHIC] [TIFF OMITTED] T5461.023
[GRAPHIC] [TIFF OMITTED] T5461.024
[GRAPHIC] [TIFF OMITTED] T5461.025
[GRAPHIC] [TIFF OMITTED] T5461.026
[GRAPHIC] [TIFF OMITTED] T5461.027
[GRAPHIC] [TIFF OMITTED] T5461.028
Senator Carnahan. Thank you very much. I am sure there is
more there that we would all like to hear, but we probably
should move on back to the topic here of drug coverage.
There is one part of this that I would like to ask your
opinion on. We haven't had much discussion about Medigap, but
do you feel, as some people do, that it is unrealistic to think
that Medigap is going to provide coverage for our seniors? What
would a typical Medigap policy cost?
Mr. Schmalfeld. I am sorry. I can't respond. I don't know.
Those who are--it would depend upon age and a number of other
things, and I don't have that information in front of me. Maybe
others do.
Senator Carnahan. So you never tried to get Medigap
coverage or----
Mr. Schmalfeld. Fortunately, I am with that small group of
employers that continues to provide insurance, and so I stand
in a minority here because I worked for a large university
which continues to make prescription drugs available to me at--
still, I share in the cost, but--so I do not have a Medigap
program myself.
Senator Carnahan. I am sorry. Over here?
Ms. Steele. I can tell you my husband spends $130 a month.
Senator Carnahan. $130 a month.
Ms. Steele. [Inaudible comment off microphone.]
Senator Carnahan. Do you know which plan that is of the ten
plans, which one----
Ms. Steele. [Inaudible comment off microphone.]
Senator Carnahan. Thank you.
Mr. Bougeno, as a new retiree, I am sure you are planning
on relying on your employer's drug benefit. Do you have any
fears that it might be cut or eliminated? Would you talk into
the microphone, please?
Mr. Bougeno. I feel it is being cut on a daily basis--not
quite daily, but monthly basis. We are losing just little bits
here and there. There used to be gray areas that the insurance
companies would go ahead and pay. Today they are just moving
those over to the side. They will not pay them. And those are
areas that we have been used to all these years paying, and
they were not actually negotiated items, and they were in what
they call--they call it ``gray area.'' So now they are not
paying them. So we are losing just a little bit with each
passing day.
Senator Carnahan. I noticed that you advocated a Medicare
benefit--I am sorry, a prescription drug benefit under Medicare
as opposed to a private insurer. Would you tell us your
thinking on that?
Mr. Schmalfeld. Why it should be in Medicare?
Senator Carnahan. Yes.
Mr. Schmalfeld. We believe that presently the Medigap
programs that there are have basically eliminated prescription
drug as a covered item, and that practically the only choice
that remains ahead of us for having any hope of having coverage
at all is through Medicare.
Going back historically, I don't think any of us could have
imagined 36 years ago the degree to which prescription drugs
would play a part in terms of managing health conditions. That
has grown considerably. There have been many breakthroughs that
have made using prescription drugs the treatment of choice that
one could not have imagined.
With this has come a great increase in terms of cost. A new
drug coming on the market, the pharmaceutical company will get
as much as it can for as long as it can before allowing it to
become a generic drug. In fact, we have seen some instances
where the Congress has taken action to extend the patent period
for certain drugs, which makes it even more difficult for
people to be covered. I think it is the only choice that
remains ahead.
Earlier this month, on the occasion of the 36th
anniversary, AARP went to all of the offices of Senators and
representatives, including yours in St. Louis, and presented a
cake with a piece out of it, which said prescription drugs--and
that piece out was the prescription drug benefit that is yet to
be enacted. And we hope that the Congress will move toward
enacting this, particularly since monies have already been
identified and are just waiting for a bill to be introduced
that utilizes those monies appropriately.
Senator Carnahan. I did hear about the cake that was
delivered, and I hope that I will be able at some point to
return you a slice of cake and say this is what we have done,
we have put it all together. [Laughter.]
Mr. Schmalfeld. Thank you. We look forward to that.
Senator Carnahan. Mrs. Steele, I certainly admire what your
organization is doing on behalf of women and the studies that
you are making. In drafting a Medicare prescription benefit,
though, are there certain issues that we need to focus on that
would be particularly helpful to elderly women?
Ms. Steele. I believe that it has to be stable and it has
to be protected so that inflation--so that with inflation the
amount of coverage for prescription drugs will increase also. I
think it has to be--in order to pay for this, we are going to
have to have everybody in the pot, because you simply cannot
pay for it if only the sickest choose coverage.
So those are the things that I see, and, of course, that
everybody gets the kind of care they need; instead of saying we
are going to cover this, this, and this, you have a menu of
choices.
Senator Carnahan. Well, how can we--you say we need the
low-cost beneficiaries in there as well to expand the pool. How
can we make this benefit more attractive so that more people
will want to take part?
Ms. Steele. Well, I think even those who have--well, let me
say that I am one of those who no longer is insured by a former
employer. When my husband retired in 1987, we were told we
would have lifetime coverage. That ended in 1997, and we knew
it was going to end in 1993.
Senator Carnahan. So the stability factor is a very
important one.
Ms. Steele. Yes. But it also means that I have to go out
and find my own. I am not part of a group anymore, which makes
it much more difficult.
So I just think we have to be able to count on a community.
We are a community. We need to work together as a community to
protect everybody in that community.
Senator Carnahan. Mr. Schmalfeld, would you like to comment
on that, how we can make it more attractive?
Mr. Schmalfeld. Obviously it has to--the Congress needs--it
is a very daunting job. They have to devise something that will
be attractive to----
Senator Carnahan. And affordable.
Mr. Schmalfeld. And affordable to everyone. And I think
this is a kitchen-table kind of issue, that when the plan is
devised, that people will sit around the kitchen table and say
this is what we are paying now, this is what is proposed under
this system, does this look like it is moving in the right
direction? Does this make it interesting and affordable and
appropriate for us to adapt? Until a program is devised, it is
really hard to comment and say this is the way, this is the
deciding factor that I am going to decide to sign up because it
is a good deal, not because it is something that I am going to
pay more on. Or you weigh out the difference. You say, well, my
insurance costs--which I didn't say earlier. You asked about
the cost and so forth. I failed to mention that over the years
since I have retired in 1996, my insurance rates have increased
by more than 45 percent. So while I am still covered, more of
my resources are being spent to provide that benefit. And I
heard recently in a newsletter that that cost is going to go up
even more.
So I think people are going to be very practical about
this. It is a money issue, and it is like look at what the
details are, what it is going to provide, what is the
deductible, what are we paying now, what has our history been
with drug costs, is it going up, are we likely to lose our
insurance benefit, as one of our panelists has talked about, or
be reduced. Are we on a better path going into this?
I think the other thing is that as a program is offered,
those concerns--then companies that offer prescription benefits
now as part of retirement benefits are going to have decisions
to make. Hopefully they will continue them. If they don't
continue them, one of the options is going to be perhaps to pay
the cost of that, whatever the charge is under Medicare, and
also to provide wrap-around things.
Another thing that AARP is concerned about is low-income
persons, people who need additional help to pay for the cost of
insurance, which is true now in terms of Medicare Part A. If
you are in a certain low-income basis, you have that premium
paid.
So there are options out there that I think common-sense
people--it is a money issue. They are going to have to look at
all the details, and they are going to have to decide whether
it is worthwhile or not. But if we don't attract the large
numbers, then it is not going to work.
Senator Carnahan. Well, thank you so much for sharing these
experiences with us today. We are going to have to move on to
the third panel. I notice we are running out of time. But,
again, thank you very much for being here. [Applause.]
Our final panel will explore in greater detail the serious
impact that high prescription drug costs are having on Missouri
seniors.
Our first witness today will be Dr. Lanis Hicks, professor
in health service management at the University of Missouri
School of Medicine. Dr. Hicks has been involved in several
projects with rural hospitals, conducting environmental
assessments and market strategies. She also conducts research
into the cost-effective delivery of health services in rural
areas. Welcome, Dr. Hicks.
Dr. Stephen Zweig is--did I say that, pronounce that--
Zweig, I am sorry. Dr. Stephen Zweig is a professor and
associate chair and coordinator of geriatric activities at the
Department of Family and Community Medicine at UMC. He is also
director of the Care and Aging Program at the UMC Hospital and
Clinic. Dr. Zweig has received numerous awards and honors and
has focused much of his career and training around geriatrics,
and we are very honored to have these distinguished panelists
with us today.
Again, your written testimony will be received into the
record, and I ask you to make your presentations--keep them
limited to 5 minutes.
Dr. Hicks.
STATEMENT OF DR. LANIS HICKS, UNIVERSITY OF MISSOURI SCHOOL OF
MEDICINE
Dr. Hicks. Thank you for the opportunity to be here today
to discuss the issue of seniors and prescription drugs. My name
is Lanis Hicks, and I am a professor of health economics in the
Department of Health Management and Informatics at the School
of Medicine.
As this first graph shows, there has been a rapid increase
in expenditures on health care, and the expenditures on the
prescription drugs has been increasing even more rapidly. In
1996, they accounted for 6.5 percent of total expenditures. In
the year 2000, they were up to 8.9 percent. And by 2010, they
are expected to account for almost 14 percent of the health
care expenditures.
These rising expenditures on prescription drugs are not
necessarily bad, but the implications of the increases have to
be examined. Prescription drugs are increasingly used as
components with our other medical interventions as complements
to improve patient outcomes. They are used as immuno-
suppressants used with organ transplants. Other prescription
drugs are used to substitute for more invasive procedures, such
as lipid-lowering drugs to reduce the need for bypass surgery,
and to treat medical conditions that previously we weren't able
to treat, such as Parkinson's disease.
Furthermore, as our knowledge and understanding of genetics
grows, pharmaceuticals are expected to grow exponentially.
These changes in pharmaceutical products are expected to have a
disproportionate impact upon the seniors since seniors
represent the cohort relying mostly on prescription drugs to
manage their multiple health problems. Seniors not only have
more problems with their health, but their health problems tend
to be those that respond to drug therapy.
In 1996, 89 percent of seniors reported having one or more
chronic health problems, and almost 10 percent reported having
five or more chronic problems. Chronic health problems have
major implications for expenditures on prescriptions.
Currently, seniors account for about 13 percent of our total
population but incur about 43 percent of our total prescription
drug expenditures.
There is discrepancy in the utilization of prescription
medications and the expenditures on prescriptions between
Medicare beneficiaries that have insurance coverage and those
that do not have insurance coverage. As this graph shows, the
dark line is those that do not have any kind of benefit
coverage, and the other ones are those that have benefit
coverage.
As the data show, individuals with insurance coverage
filled on average 24.4 prescriptions while those without
coverage filled 16.7 prescriptions. These same discrepancies
hold even when the adjustments for health status, economic
conditions, and chronic conditions are considered.
Under all circumstances, individuals with insurance
coverage on average utilized more prescription medications than
individuals without insurance coverage. As shown, non-covered
seniors living below the poverty level only utilize about half
the number of prescriptions as covered seniors below the
poverty level use. Non-covered seniors indicating poor health
status use about a third fewer prescriptions than covered
seniors in poor health.
These data indicate the critical role that insurance plays
in the utilization of prescriptions medications by seniors.
Non-covered individuals with five or more chronic conditions
average $1,051 on prescriptions while covered individuals with
five or more chronic conditions average about a little over
$1,800, about 75 percent more, although covered individuals pay
only $595, or 56 percent as much out of pocket.
As with the other end, seniors without a chronic condition
but with insurance coverage spent almost 70 percent more for
prescriptions than non-covered beneficiaries, although their
out-of-pocket expenses are only about half as much.
From the data available, it is not possible to determine
the appropriate level whether or not some individuals are
spending too much and others too little. But what we have been
able to look at through some of the research is that non-
covered beneficiaries with hypertension were 40 percent less
likely to purchase anti-hypertension medication, and we have
also shown that about three-fourths of drug-related
hospitalization by seniors could have been avoided with the
proper use of medications.
Rural populations tend to face exacerbated access and
financial problems, with other half of senior residents living
at 200 percent of the poverty level compared to 41 percent.
All of these are problems that we are encountering within
the health care industry, and the problem, as we try, you know,
to work toward solving these problems, is to recognize what is
going to happen in a very short period of time when the elderly
increase from about 13 percent of our population to over 20
percent. And that is going to have increasing medical--you
know, in terms of trying to make it an affordable plan.
Thank you.
[The prepared statement of Dr. Hicks follows:]
[GRAPHIC] [TIFF OMITTED] T5461.029
[GRAPHIC] [TIFF OMITTED] T5461.030
[GRAPHIC] [TIFF OMITTED] T5461.031
[GRAPHIC] [TIFF OMITTED] T5461.032
[GRAPHIC] [TIFF OMITTED] T5461.033
[GRAPHIC] [TIFF OMITTED] T5461.034
[GRAPHIC] [TIFF OMITTED] T5461.035
[GRAPHIC] [TIFF OMITTED] T5461.036
[GRAPHIC] [TIFF OMITTED] T5461.037
[GRAPHIC] [TIFF OMITTED] T5461.038
Senator Carnahan. Thank you.
Dr. Zweig.
STATEMENT OF DR. STEPHEN ZWEIG, DEPARTMENT OF FAMILY AND
COMMUNITY MEDICINE, UMC
Dr. Zweig. Thanks, Senator Carnahan, for this opportunity
to testify before this Special Committee on Aging. This is an
important problem, and we hear your genuine concern and
appreciate that.
I am privileged on a daily basis to work with older people,
to help to teach medical students, residents, fellows in
geriatrics and others about the importance of caring for elders
and how to do that in a cost-effective way. I don't know how I
can speak more articulately about this program than those
patients and family members that have come before me. It is a
serious problem.
The Congressional Budget Office estimates that spending on
prescription drugs by Medicare beneficiaries from all sources
will equal $1.3 trillion between 2004 and 2011, and that
includes spending by beneficiaries and insurers on their
behalf.
As has been pointed out previously, purchase of Medigap
policies that cover prescription drugs are expensive. They have
deductibles, high copays, and benefit caps. And as Ms. Muhleman
pointed out, these are often out of the reach of many people
who need them.
Prescription drugs spending is increasing at a rate 3 times
that of professional and hospital spending for Medicare. Not
only are many patients filling prescriptions, but the cost of
those prescribed drugs is very high. In fact, the 25 most
heavily advertised and promoted drugs accounted for 40 percent
of the increase in retail drug spending in 1999.
As has been pointed out, Medicare beneficiaries fill
prescriptions, 86 percent did in 1995, and a Family USA study
found that in the year 2000, the number of prescriptions filled
by the elderly averaged 28.5 per year, including refills.
As Ms. Sowells pointed out, it is not surprising that those
people with many chronic conditions, such as heart disease,
high cholesterol, and diabetes, spend much more, over $3,000 a
year out of pocket compared with an average of $1,343.
While the majority of Medicare recipients have some form of
insurance, this insurance is not adequate to cover the cost of
most beneficiaries. Unfortunately, there is little relationship
between the cost of the drug and the benefit it may afford. But
the absence of needed drugs may precipitate loss of function in
the elderly, resulting in increased disability and dependency.
So, in summary, the number of prescriptions is up. The cost
of those prescriptions is up. Costs are higher for those
without insurance coverage. Total expenses, however, are higher
for those with good insurance coverage, and those with multiple
chronic diseases have more need.
Unlike other insurance policies, out-of-pocket expenses for
prescription drugs are unlimited in most circumstances, and as
has been pointed out, 65 percent of beneficiaries have some
form of insurance and 60 percent of them have supplemental
plans. Most are employer-sponsored, but this is also
decreasing. The statistic that I had read included only 30
percent of elderly with employer-sponsored plans in 1998.
Twenty percent are members of Medicare HMOs, which have
historically had the most generous prescription drug coverage,
but more recently they have limited these benefits. And as Mr.
Lakes' experience testifies, high prescription drug users are
more likely to disenroll from Medicare HMOs and may not qualify
now for their former Medigap plans, leaving them without any
coverage at all.
As has been also pointed out, those most likely to be
without coverage have low income, to be of fair or poor health
status, and to be older than 75. And even though the Medicaid
program covers 17 percent of elderly living in the community, a
very, very fine prescription drug program, many poor people
don't receive Medicaid benefits. In fact, in 1999, an estimated
45 percent of community living Medicare beneficiaries within
incomes below the Federal poverty level received no Medicaid
benefits.
Dr. Hicks has articulately described the population trends.
Our population is aging. By 2020, 20 percent of Americans will
be 65 and older, and the largest growing population in the
United States is that in the 85-year-and-older group. As our
population ages, the prevalence of chronic disease will also
increase, which means more prescription drug use and higher
costs.
Valuable pharmacologic research is fueled by a promise of a
drug that will be preferred by both patients and physicians,
and it will be expensive. While Medicare has limited payments
to physicians and hospitals, there has been no such limit on
the cost of prescription drugs.
I have a nurse colleague in our practice named Rebecca
Raskar who coordinates the care for about 230 of the most frail
and complicated older patients that we care for living in the
community. And I asked her this morning what I should tell this
group, and she said, ``Tell them these poor old people can't
afford those expensive drugs.''
Indigent drug programs that are sponsored by pharmaceutical
companies are valuable, but they are full of gaps and delays,
and they are incomplete. Frequently, our patients and us cobble
together programs which are associated with discontinuity and
possible injury, and I will be happy to give examples.
Drug samples are free at first and costly much later. As
Mr. Lakes pointed out, they are not available long term. And
the Medicaid spend-down program has helped many, but is not
available to all those who need it.
I will stop there.
[The prepared statement of Dr. Zweig follows:]
[GRAPHIC] [TIFF OMITTED] T5461.039
[GRAPHIC] [TIFF OMITTED] T5461.040
[GRAPHIC] [TIFF OMITTED] T5461.041
[GRAPHIC] [TIFF OMITTED] T5461.042
Senator Carnahan. Well, thank you very much, Dr. Zweig.
Dr. Hicks, in your testimony, you said that those without a
prescription drug benefit fill fewer prescriptions than those
who do have those benefits and that this might indicate that
people are not filling prescriptions, not taking the medicines
that have been given to them. And we have seen some examples of
that already today of people having the medicine or only taking
it every other day.
What are the possible health implications of this kind of
behavior?
Dr. Hicks. Well, I think we have seen--part of it, as you
look at some of the research, if you cut your medication in
half, you know, someone said that, well, maybe the--their view
was that, well, at least it would give them half of the
benefit. Oftentimes medications if taken in half give no
benefit because the dosage is given at a point that is needed
to make the difference, and if you don't take it at that
dosage, you really don't get any benefit.
I think we see it where the hypertension that took 40
percent fewer prescriptions, we then see an increase in
strokes, heart problems, and very expensive hospitalizations
because they haven't been able to afford the preventive type of
care.
Senator Carnahan. And what would you recommend, then, for
those people who simply can't afford to have their prescription
refilled?
Dr. Hicks. I think it is the same thing we have been
talking about of trying to get some type of an affordable
prescription drug benefit so that everyone has the basic
coverage as an elderly individual as part of a Medicare plan.
Senator Carnahan. Some are fearing that if the Government
provides a Medicare drug benefit, private employers will tend
to scale back and not provide programs. In fact, there are
already some indicators now that they are beginning to cut back
on coverage.
I was wondering if both of you would comment on this trend
and how you believe the creation of a Medicare drug benefit
would impact the private sector.
Dr. Hicks. I think we are already starting to see the
private sector cut back on the packages that they make
available for their retirees. You know, there is a lot of data
already out there that shows this is happening, and it is
happening without the protection of the Medicare program to
pick up the difference. It is falling on the individual to make
up that difference as the private companies cut back.
Yes, I think the answer is we probably would see private
insurance companies cut back if Medicare--very similar to what
we have seen as Medicare has picked up other costs.
Senator Carnahan. You don't think they would offer a
supplemental of some kind, they would just let it go?
Dr. Hicks. There is obviously the potential to offer a
supplemental like our Medigap programs that will help pay for
the deductibles and copays. I think on your prescription drugs,
just because, you know, the large number and the increasing
expense of those packages that would be--they would be less
inclined to offer the supplemental.
Senator Carnahan. I was wondering if you would comment, Dr.
Zweig, on the advantages and disadvantages you see of a drug
benefit under Medicare as opposed to private insurance.
Dr. Zweig. Obviously not everyone has private insurance
now, so that would be certainly a major difference. I think
this is an incredibly tough problem, and anything that we do
will be very expensive.
As we look at the costs of administering health programs,
the cost of administering the Medicare program has historically
been much less than that associated with other private
insurance programs. I am not a health economist like Dr. Hicks,
and I can't predict what employers or health insurers will do.
I support universal health insurance for everyone in this
country and I believe that---- [Applause.]
Senator Carnahan. I think you have an audience that agrees
with you.
Dr. Zweig. I believe that as we try to take money out of
different pockets, as we are constantly doing, in trying to
care for people, and particularly older people, not only with
regard to drugs but with regard to long-term care and hospital
care and home care, it becomes very complicated.
I think that we will need to replace the existing support
for the two-thirds of the population if we go with a universal
Medicare plan, and those who are contributing to those existing
plans will have to contribute in some way.
I think that we have to do something first for those people
who have greatest need.
Senator Carnahan. Let's move on to something that affects
people who live in rural areas, and I think they have certain
special problems in many areas, access problems and certainly
access to prescription drugs is one of those. And one of the
principles that we laid out early on regarding a benefit was
that it should be accessible so that all beneficiaries, no
matter where they live, have access to prescription drugs.
What do you see as the challenges in providing prescription
drug benefits in rural areas? Either one of you, or both.
Dr. Hicks. I think obviously one of the problems we have is
the same problem we have with all other health care, is just
availability of the medications. Especially if a rural elderly
takes a medication that is somewhat unique and different and
rare, it becomes almost impossible to get that in a local
pharmacy because of the problems they have of getting it and
keeping it and the low volume. So I think that is going to be
an area that we really have to worry about with our rural
elderly, is the lack of volume in a lot of the different kinds
of medications and getting that in.
Dr. Zweig. Just to add to that, rural practitioners tend to
be the most overwhelmed of all. We have been very fortunate to
have social workers within our program who help people to sign
up for indigent drug programs which have afforded them some
services that they may not have otherwise had.
The transportation to accessible pharmacies at low cost is
a challenge. If people like Mr. Lakes need to get their
prescriptions every 2 weeks because they can't afford it, that
certainly adds a tremendous challenge to being able to get a 3-
month supply of medications that will both reduce the cost of
those drugs and also make it more likely that the person won't
have gaps in their treatment.
I think people are less likely to take those drugs for
which they see a direct positive effect, and they may not be
the ones that are the best ones to choose to not take.
Senator Carnahan. On the affordability side--again, I have
asked this of some of the other panels as well--how can we make
a benefit that is both attractive and affordable? I would like
to have your opinion on that as well.
Dr. Hicks. I guess my response is I really don't know. The
affordable part of it, with all of the new drugs coming on the
market that are extremely expensive, the growing elderly
population is going to make it hard to make it affordable.
I think one of the difficulties we always face with any
kind of governmental insurance program is that it can become an
easy target, because suddenly we have the information in front
of us about what it is actually costing because it is a
Government program, and we avoid some of that in the private.
It doesn't make it any less affordable. It just makes it less
of a target to be able to hit.
And so I think trying to find an affordable one is doing
things that you talked about earlier, and that is, I think it
will be necessary to have some type of copayment and to have
some type of deductible. I would, however, really not like to
see any kind of cap put on it, saying a maximum benefit,
because unfortunately what you do with a maximum benefit is you
max out the people that need it the most, and those are the
ones that are spending the most. [Applause.]
Senator Carnahan. I might move on to another point that we
mentioned, that is, the point of stability. It seems like the
seniors get to where they are relying on a program, and it is
very unsettling to have the coverage change. So I was wondering
if you might comment on how we can best create a drug benefit
that is stable and one that is reliable as well.
Dr. Zweig. Well, that is clearly the advantage of doing it
through the Medicare program instead of a private insurer in
terms of that stability. It seems to me any plan is going to
need to include some combination of deductibles and out-of-
pocket limits and premiums. I think there has to be meaningful
price reform with regard to expenses and costs for drugs. I
think---- [Applause.]
Senator Carnahan. You have got a real following here.
Dr. Zweig. Yes. I think we have to be careful to not divert
support to prescription drugs away from other aspects of the
Medicare program. I think the formulary has to be comprehensive
but evaluated by health care providers who know most about
that. And I think that we should support drugs in particular
that target significant symptoms and prevent disability in
older people.
I am concerned that if we only have a program that supports
the poor that the program will become a target, as the Medicaid
program has become in political circles. And, honestly, I am
concerned about the recent economic forecasts as to how much
money we will have for such a program. And I applaud your
interest in continuing to try to pursue this very great
challenge.
Senator Carnahan. One of the things that you mentioned
earlier was the use of drug samples. It seems like doctors will
often, in all good intent, provide these samples for someone
with a chronic health problem, and they use it for a month or
so, and they get committed to the drug, and then it is a very
expensive drug for them to follow up with.
Are there ways that we can educate our seniors and their
caregivers to consider these cost issues up front when they are
setting up a treatment program?
Dr. Zweig. I think this is an incredibly important problem.
You know, in general, the samples left in physicians' offices
are the newest and most expensive ones. Some of those are very
valuable drugs for which there is no alternative. Many of them
are not. Advertisements for these drugs help to support medical
journals and provide a lot of the costs for supporting
education and continuing education.
Most recently, as you know, these drugs have been now
prescribed on television and on radio, so patients come to me
on a daily basis saying, ``Why aren't I on this one?'' And they
are always among the most expensive drugs available.
I do think that patients need to be informed, but the
effect of the advertising and the unfiltered attention of the
media to the promises of medical science, the cure of cancer of
the month, has created incredible expectations that we cannot
meet at this point.
I think our job as physicians is important. We have to make
sure that our patients are taking the drugs that show really
the most demonstrated benefit and to negotiate with them about
that. And what we are trying to do in medical school and
residency training is to help our students evaluate new
information and practice in an evidence-based way so that they
can then communicate that effectively with patients. And we
have to be familiar with costs. I mean, it is inexcusable for
physicians to say, ``I don't know what that drug is going to
cost'' and not put that into the context of their prescribing
plan. [Applause.]
And in the process, then, engaging patients and making
those kinds of choices about--and there is a creative program
that I just learned about in Ohio a couple of days ago using
some of the same techniques of pharmaceutical sales
representatives, where it is an organization called Generics
First. A generic drug company is going around and spending time
with physicians informing them about cost comparisons of drugs
and helping them to learn the least expensive alternatives. And
I think that that is incredibly important. This is a program
that some researchers at Harvard discovered a few years ago. If
we help to train physicians about those things, they can help
their patients as well.
Senator Carnahan. Well, thank you very much. We are about
to run out of time, and I was determined that we would be able
to finish here at noon. But I appreciate your being here very,
very much, and I want to thank you for sharing this with us. I
will make a closing statement, and we will adjourn for the day.
But before we adjourn, I want to thank all the witnesses
who have been here to share their thoughts and their opinions
with us on the problems of prescription drug costs.
For those of you who have other thoughts on the subject and
would like to share them with me, there is a table out in the
hall where you can write comments, and I will take those back
to Washington with me and read those and get back with you.
I think you have conveyed a very clear and a very forceful
message today. We need a prescription drug benefit under
Medicare, and we need it now. [Applause.]
This benefit should be universal, that is, it should cover
every Medicare recipient who wants to participate; and it
should be affordable, and it should be available to all. And it
should be something we can rely on for many years into the
future.
I will be returning to Washington next week following the
Labor Day break, and we will begin to struggle to craft a
prescription drug benefit that works. It will be a difficult
battle because we are in tight budgetary times. But I assure
you that I will remember what has been said here today, and I
will see that those in Washington know what you think.
I want to close by reading a portion of Mrs. Ruengert's
very fine written testimony that she submitted for the record.
I mentioned it earlier. She is caring for her 91-year-old aunt
in her home. Her aunt, Mrs. Dorothy Creighton, lost her husband
some years ago. Mrs. Creighton was able to live by herself for
a while before her own health began to fail. And at this point,
she sold her house and she spent her savings to move into an
assisted living home, where she stayed for several years until
her expenses became too burdensome.
Because of the rising costs at the home and rising cost of
medical expenses and her reduced savings, she could no longer
afford the arrangement. At this point, Mrs. Ruengert invited
her aunt to live with her in Jefferson City, and in testimony
submitted to this committee, Mrs. Ruengert writes, and I quote,
``Even with my help, things are financially hard for her. She
didn't want to tell you that she was overdrawn at the bank 3
weeks ago when she sent a check to AARP to pay for medicine.
But I told her this committee needs to hear about all your
financial problems due to your medical bills. I ask you, What
do the elderly do when they have no family member who can help
them?'' Yes, what do the elderly do when they have no family
member to help them? That is a haunting question, and that is
the question I am going to take back to Washington with me
because that is the question we need to find the answer to.
This hearing stands adjourned. [Applause.]
[Whereupon, at 11:45 a.m., the committee was adjourned.]
A P P E N D I X
----------
[GRAPHIC] [TIFF OMITTED] T5461.043
[GRAPHIC] [TIFF OMITTED] T5461.044
[GRAPHIC] [TIFF OMITTED] T5461.045
[GRAPHIC] [TIFF OMITTED] T5461.046
[GRAPHIC] [TIFF OMITTED] T5461.047