Rising prices of prescriptions force older patients to make trade-offs
Americans, especially the elderly population, are taking more prescription drugs and paying more for them than ever before.
Donna Ignatavicius, MS, RN, a certified gerontological nurse in Hughesville, Md., has heard stories of older Americans who resorted to eating dog food, who subsisted on bread and water, who became malnourished so they could afford prescription drugs.
“It’s not uncommon,” said Ignatavicius, president of DI Associates Inc., a health care consulting firm. “We hear the older adults say, ‘I’m either going to have to not eat so I can buy my medicines or buy food and give up my medicines.’ “
Prescription drugs – and the lack of money to pay for them – are hot topics in this presidential election year. Candidates are promoting prescription drug plans for Medicare, which does not pay for medicines. Congress is considering several bills to add drug coverage to Medicare. A recent Associated Press poll showed that six of 10 voters consider prescription drugs a “very important issue” in their vote for president.
In the midst of the debate about who should pay for prescription drugs, Americans are asking other questions as well. Why do these tiny pills and drops cost so much? Will prices continue to escalate? What will happen to the health care system if they do?
The answers from drug manufacturers: Prices are increasing because more people are taking prescription drugs, and new drugs are costly to research and develop. The price of prescription drugs will continue to increase, but drugs still are inexpensive considering what they provide – improved quality of life and, in some cases, longer life.
The answers from drug company critics: Drug companies, now among the most profitable businesses in the nation, will charge whatever the market will allow to continue reaping profits. The price of prescription drugs will continue to increase unless there is pressure from consumers, the health industry and government.
What we spend
Americans, especially the elderly, are taking more drugs and paying more for them than ever before. Annual prescription drug spending per elderly person has grown from $559 in 1992 to a projected $1,205 for this year, according to a report by the PRIME Institute at the University of Minnesota College of Pharmacy.
The institute studies economic and policy issues related to pharmaceuticals. By 2010, seniors will spend an average $2,810 a year on prescription drugs, the report predicts.
For seniors without prescription drug coverage, this represents a sizable portion of even a middle-class income. When her father was receiving chemotherapy treatments for lung cancer, said Kay McVay, RN, president of the California Nurses Association, he paid $40 for a single pill he needed to take four times a day.
“It was outrageous,” she said. “It cost more for his drugs than I made in a year.”
The presidential candidates say their prescription drug plans will offer relief.
Vice President Al Gore proposes a voluntary $25-a-month addition to Medicare that would cover 50 percent of drug costs and all costs after out-of-pocket expenses reach $4,000.
Texas Gov. George W. Bush proposes coverage through partially subsidized private insurance plans.
Green Party candidate Ralph Nader favors universal health care coverage and multiple licensing that would allow many companies to make and sell the same drug.
Most of the focus is on coverage because even if drug companies lowered prices by 10 percent or 20 percent, the drugs still would be too expensive for many seniors and uninsured people. Whatever coverage Medicare recipients end up with, an estimated 50 million Americans still will have no drug coverage and millions more will have limited coverage.
Even with Medicare coverage, many may find themselves in a situation similar to that of Robert Jarrett of Chicago.
Jarrett takes medications for diabetes, glaucoma and high blood pressure. His co-payments through a state-sponsored prescription drug program amount to at least $80 a month, a large chunk of his monthly $530 Social Security income.
Sometimes, when drugstore workers didn’t understand how his coverage worked, they charged him $90 for eye medication alone, he said.
“It was really rough,” said Jarrett, who now has full coverage through a state program for low-income residents. “I did without my medicines a lot of times because of the problems.”
The price of research
If Americans want new and innovative drugs, capable of extending life and improving the quality of life, they must be willing to pay for research and development, pharmaceutical industry representatives say. It takes an average of 12 to 15 years and costs an average of $500 million to bring one new medicine to market, according to the Pharmaceutical Research and Manufacturers of America (PhRMA).
Research and development spending by drug manufacturers has risen from about $2 billion in 1980 to about $24 billion this year, an estimated 20 percent of total revenues.
“Unfortunately, the risk factor has not gone down much,” PhRMA spokesman Jeff Trewhitt said. “As long as that continues to be the case and as long as the drug approval process continues to take the time that it does, there’s going to be a certain price level.”
But critics say drug companies spend nearly as much on advertising, marketing and lobbying – at least $15 billion – as they do on research and development.
Fortune magazine ranked the pharmaceutical business as America’s most profitable industry in 1999, with profits making up 18.6 percent of revenues. Such profits are necessary to draw investors to the risky business of developing drugs, Trewhitt said.
“I think the research and development is expensive,” Ignatavicius agreed. “But I also know that we know that drug companies are out to make a profit. We would like to see the profit margin not be on the backs of patients.”
Ignatavicius and others do not believe drug prices will come down by themselves. “If the cost of research and development fell by a third, would prices fall by a third?” asked David Gross, Ph.D., a senior policy adviser in the American Association of Retired Persons’ Public Policy Institute. “That’s not the way the markets are supposed to operate.”
Drug prices in countries such as Mexico and Canada, are lower because those countries put a cap on how much drugs may cost.
Such price controls in the United States would stifle the innovation that has led to new medicines for AIDS, Alzheimer’s, cancer, heart disease and other illnesses, Trewhitt said. PhRMA opposes Gore’s Medicare drug coverage plan, as it could lead to price controls, he said.
If the industry wants to avoid price controls, Ignatavicius suggested, companies ought to consider giving away large amounts of drugs to community programs that help older Americans and uninsured people.
One way to lower prescription drug spending is to use fewer drugs or look for cheaper drugs, said Carmella Bocchino, MBA, RN, vice president of medical affairs at the American Association of Health Plans.
Recently, she said, a colleague with a cold and an earache went to see a physician and left with prescriptions for five different medicines, mostly antibiotics. When the colleague called the physician back and said she didn’t want to take so many medicines, he said, “Most of my patients want me to prescribe everything, so that’s what I do,” Bocchino related.
Physicians and nurse practitioners need to “step back and look at where is the appropriate use of these drugs and where is the inappropriate use that has been driven by people’s expectations and their convenience,” Bocchino said.
The long run
Although prescription drug spending now makes up an increasing percentage of total health care spending, Trewhitt said, drugs could bring down health care costs.
New discoveries, especially those coming out of the biotech industry, have the potential to replace surgery and hospital procedures with medicines that people can take at home, he said. Some drugs already reduce expensive hospital stays, he added.
But Bocchino does not expect drugs to replace surgery in the near future. Many new drugs, if anything, seem to be harsher on older people’s kidneys and livers, and in some cases surgery is a better option, Ignatavicius said.
Even miracle drugs won’t work if people can’t afford them, McVay said. “I’ve had people not taking their medicine because they said their husband or wife needed it more. These are diabetics and heart patients. They come in to the hospital and they’re very, very ill.”