[Congressional Record (Bound Edition), Volume 145 (1999), Part 21]
[Senate]
[Pages 31064-31065]
[From the U.S. Government Publishing Office, www.gpo.gov]



                 THE RISING COST OF PRESCRIPTION DRUGS

  Mr. JOHNSON. Mr. President, I want to address an issue of critical 
importance to millions and millions of Americans, an issue I have come 
to the floor previously to discuss and an issue that has become one of 
my highest legislative priorities, the lack of affordable prescription 
drugs.
  Today, nearly thirty five percent of Medicare beneficiaries, 14 
million people, have absolutely no coverage for prescription drugs. 
Unfortunately, these are also the same individuals who consume the 
majority of prescription drugs in our country. Studies indicate that 
eighty percent of retirees take at least one prescription drug every 
day and those over the age of sixty-five take on average, eighteen and 
a half prescription drugs per year.
  Older Americans spend a tremendous amount of money out of pocket on 
their health care expenses. It is estimated that seniors spend an 
average of fourteen percent on hospital admission costs, thirty one 
percent on physician visits, thirty four percent on prescription drugs 
and twenty one percent on other health care related expenses. 
Prescription drugs have become the number one health care expense for 
senior citizens in our country.
  I came to the floor a few weeks ago to talk about this very same 
issue, but I am addressing this issue again because I believe this 
matter is too critical for Congress to ignore. It appears as though 
Congress will not reach an agreement before we adjourn for the year, or 
even have a meaningful discussion, on how we will provide relief to the 
millions of needy seniors throughout our country and my state of South 
Dakota who struggle every day to pay for their medications.
  While prices for the prescription drugs most often used by older 
Americans are skyrocketing far beyond inflation, recently the 
pharmaceutical industry reveled in record breaking stock prices and an 
announcement of a proposed multi-billion dollar merger between Warner 
Lambert and American Home Products. This proposed deal would form the 
biggest merger in the history of the drug industry and create the 
largest drug maker in the world. The transaction between Warner Lambert 
and American Home Products is worth nearly seventy three billion 
dollars, billions more than the federal government spends on most of 
their thirteen individual appropriation bills.
  News of this proposed merger, prompted another drug industry giant, 
Pfizer, Inc. to announce a counter offer to buy Warner Lambert at a 
cost of eighty-two and a half billion dollars.
  On the heels of the pharmaceutical industry's financial exploits, 
``Families USA: The Voice for Health Care Consumers'' recently released 
a report indicating that more than two thirds of the fifty most 
commonly prescribed drugs for seniors increased in price nearly two to 
three times faster than the rate of inflation. Last year, wholesale 
prices for fifty prescriptions commonly filled by the elderly rose by 
six and a half percent even though the overall inflation rate that year 
was just one and a half percent.
  For example, the drug Lorazepam, used to treat Parkinson's disease, 
increased three hundred and eighty five percent over the last five 
years. The report also found that while the median profit for all 
Fortune five hundred companies was four and a half percent, 
manufacturers of drugs most commonly prescribed to seniors relished in 
profits at or above twenty percent in 1998.
  The findings in the Families USA study reflect similar results that I 
found in a study that I had requested from the House Government Reform 
Committee on drug prices paid by South Dakota seniors.
  The South Dakota study found that South Dakota's elderly pay more 
than twice as much for their prescription drugs as does a 
pharmaceutical company's favored customers, such as HMO's, large 
insurance companies or the federal government. The study found that 
price differentials are as high as one thousand four hundred and sixty 
nine percent for some drugs.
  For the last several months, I have been holding meetings in 
communities across South Dakota on the subject of prescription drug 
prices. The response from seniors and young people alike on this issue 
has been overwhelming to say the least.
  I have received nearly five thousand postcards and hundreds more 
letters in response to my request for South Dakotans to contact me with 
their opinions on this issue. I have asked South Dakotans to become a 
Citizen Cosponsor of the prescription drug legislation that I 
introduced with Senator Kennedy, called the Prescription Drug Fairness 
For Seniors Act''. Our bill would allow Medicare beneficiaries access 
to the same low prescription drug prices that the drug companies offer 
their ``favored'' customers, such as HMO's, large insurance companies 
and the federal government. This bill ends the price discrimination 
that now exists against the segment of the society who rely on 
prescription drugs the most, older Americans. South Dakotans have told 
me that they support this effort to make prescription drugs affordable.
  Mr. President, we are forcing our senior citizens to make the 
unimaginable choice between ``heating and eating'' or buying their 
medication. This is a choice that no human being should have to make.
  With the proposed drug industry merger between Warner Lambert and 
American Home Products, and the recently released Families USA study, 
today highlights two more examples which reinforces my belief that we 
need legislation to help lower the high cost of prescription drugs for 
American consumers.
  A 73 billion drug industry merger has the potential to decrease any 
competition that still exists in the industry. Stock prices for the 
pharmaceutical industry are at an all time high which adds to their 
record profits. The losers for all of this are the American consumers 
who are forced to pay increasingly higher prices for prescription 
drugs.
  By joining forces, these two drug companies expect a total cost 
savings of over one billion dollars over three years by spreading the 
cost of developing new drugs, while increasing the

[[Page 31065]]

sales force needed to market old and new products. If this merger deal 
goes through, I wonder if the drug companies would be willing to pass 
along any of their one billion dollar savings to the thousands of 
seniors that I have heard from across South Dakota who cannot afford 
their monthly medication bills?
  I ask that a summary of the Families USA study be inserted into the 
Record following my statement.
  There being no objection, the summary was ordered to be printed in 
the Record, as follows:

       Hard to Swallow: Rising Drug Prices for America's Seniors


                              introduction

       For older Americans, the affordability of prescription 
     drugs has long been a pressing concern. Outpatient 
     prescription drug coverage is one of the last major benefits 
     still excluded from Medicare, and the elderly are the last 
     major insured consumer group without access to prescription 
     drugs as a standard benefit. Although many Medicare 
     beneficiaries have access to supplemental prescription drug 
     coverage, too often that coverage is very expensive and very 
     limited in scope. What is more, such coverage is on the 
     decline. As a result, older Americans--who are by far the 
     greatest consumers of prescription drugs--pay a larger share 
     of drug costs out of their own pockets than do those who are 
     under 65. This means the prices of prescription drugs have a 
     greater impact on older Americans than on younger persons.
       Four years ago, Families USA found that the prices of 
     prescription drugs commonly used by older Americans were 
     rising faster than the rate of inflation. To determine if 
     this trend of steadily increasing prices for prescription 
     drugs has improved, remained the same, or worsened, Families 
     USA gathered information on the prices of the prescription 
     drugs most heavily used by older Americans over the past five 
     years. Using data from the Pennsylvania Pharmaceutical 
     Assistance Contract for the Elderly (PACE) program, we 
     analyzed the prices of the 50 top-selling prescription drugs 
     most heavily used by older persons.
       Our analysis shows that, in each of the past five years, 
     the prices of the 50 prescription drugs most used by older 
     Americans have increased considerably faster than inflation. 
     While senior citizens generally live on fixed incomes that 
     are adjusted to keep up with the rate of inflation, the cost 
     of the prescription drugs they purchase most frequently has 
     risen at approximately two times the rate of inflation over 
     the past five years and more than four times the rate of 
     inflation in the last year.


                                findings

       The prices of the 50 prescription drugs most frequently 
     used by the elderly rose by more than four times the rate of 
     inflation during calendar year 1998. (The data on average 
     drug price increases used in this report weight drug price 
     increases by sales. This means that the average drug price 
     increases reported take into account the market share of each 
     of the 50 top-selling drugs. This is the methodology often 
     used by industry sources.) On average, the prices of these 
     top 50 drugs increased by 6.6 percent from January 1998 to 
     January 1999, though the general rate of inflation in that 
     period was 1.6 percent.
       From January 1998 to January 1999, of the 50 drugs most 
     commonly used by the elderly:
       More than two-thirds of these drugs (36 out of 50) rose two 
     or more times faster than the rate of inflation.
       Nearly half of these drugs (23 out of 50) rose at more than 
     three times the rate of inflation.
       Over one-third of these drugs (17 out of 50) rose at more 
     than four times the rate of inflation.
       Among the 50 drugs most frequently used by seniors, the 
     following drugs rose more significantly in price from January 
     1998 to January 1999:
       Lorazepam (manufactured by Mylan and used to treat 
     conditions such as anxiety, convulsions, and Parkinson's), 
     which rose by over 279.4 percent (more than 179 times the 
     rate of inflation);
       Furosemide (a diuretic manufactured by Watson that is used 
     to treat conditions such as hypertension and congestive heart 
     failure), which rose by 106.6 percent (more then 68 times the 
     rate of inflation);
       Lanoxin (manufactured by Glaxo Wellcome and used to treat 
     congestive heart failure), which rose by 15.4 percent (almost 
     10 times the rate of inflation);
       Xalatan (manufactured by Pharmacia & Upjohn and used to 
     treat glaucoma), which rose by 14.5 percent (more than nine 
     times the rate of inflation); and
       Atrovent (manufactured by Boehringer Ingelheim and used as 
     a respiratory agent in the treatment of asthma, bronchitis, 
     and emphysema), which rose by 14.1 percent (more than nine 
     times the rate of inflation.)
       Over the five years from January 1994 to January 1999, the 
     prices of the 50 prescription drugs most frequently used by 
     older Americans rose twice as fast as the rate of inflation. 
     On average, the prices of these drugs rose by 25.2 percent--
     twice the rate of inflation,which was 12.8 percent over that 
     period.
       Of the 50 drugs most frequently used by older Americans, 39 
     have been on the market for the five-year period from January 
     1994 to January 1999.
       The prices of 36 of those 39 drugs increased faster than 
     the rate of inflation over the five-year period.
       More than two-thirds of those drugs (28 out of 39) rose at 
     least 1.5 times as fast as the rate of inflation over the 
     five-year period.
       Nearly half of those drugs (19 out of 39) rose at more than 
     two times the rate of inflation over the five-year period.
       More than one-fourth of those drugs (10 out of 39) rose at 
     least three times the rate of inflation over the five-year 
     period.
       Of the 39 drugs that were used most frequently be seniors 
     and that were on the market for the period from January 1994 
     to January 1999, the drugs that rose most significantly in 
     price are:
       Lorazepam, which rose by over 385 percent (more than 30 
     times the rate of inflation);
       Imdur (manufactured by Schering and used to treat angina), 
     which rose by 111 percent (almost nine times the rate of 
     inflation);
       Furosemide, which rose by 107 percent (more than eight 
     times the rate of inflation);
       Lanoxin, which rose by 88 percent (almost seven times the 
     rate of inflation); and
       Klor-Con 10 (manufactured by Upsher-Smith and used as a 
     potassium replacement), which rose by 84 percent (more than 
     six times the rate of inflation).
       Of the 39 drugs that were used most frequently by seniors 
     and that were on the market for the period from January 1994 
     to January 1999, 31 increased in price on at least five 
     occasions during those five years. During those years, the 
     following drugs increased in price at least seven times:
       Imdur, which increased 10 times;
       Premarin (manufactured by Wyeth-Ayerst and used as an 
     estrogen replacement), which increased eight times;
       Atrovent, which increased eight times;
       Pravachol (manufactured by Bristol-Myers Squibb and used to 
     reduce cholesterol), which increased seven times;
       Synthroid (manufactured by Knoll and used as a synthetic 
     thyroid agent), which increased seven times; and
       K-Dur 20 (manufactured by Schering and used as a potassium 
     replacement), which increased seven times.
       During the last two years, there has been an acceleration 
     in price increases of the drugs most commonly used by 
     seniors. From 1995 to 1996 to 1997, those drug prices rose 
     1.3 and 1.2 times faster, respectively, than the rate of 
     inflation. From 1997 to 1998 and 1998 to 1999, those drug 
     prices rose 1.7 and 4.2 times faster, respectively, than the 
     rate of inflation.
       The median net profit for manufacturers of the 50 most 
     prescribed drugs for senior citizens was 20.0 percent in 
     1998--4.5 times larger than the median net profit of 4.4 
     percent for all Fortune 500 companies.

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