Press Release
FOR IMMEDIATE RELEASE
January 11, 2007
Contact:
|
Deane Beebe Communications Director Medicare Rights Center 212-204-6219 |
Sidney Wolfe Director, Public Citizen Health Research Group 202-588-7703 202-588-7741 |
Sharon Treat Executive Director NLARx 207-622-5597 207-242-8558 |
Abbott Laboratories Gouge Medicare and Taxpayers, Consumer Groups Report
New York, NY - The Medicare Rights Center, Public Citizen and the National Legislative Association on Prescription Drug Prices are announcing a joint campaign, “Truth is the Best Medicine,” to answer the pharmaceutical industry’s opposition to drug price negotiations under Medicare (see Myth #1 below).
The groups are launching the campaign today with the release of a report “Norvir: Gouging Medicare on AIDS Drugs” describing how taxpayers and people with Medicare are being gouged by Abbott Laboratories on its AIDS/HIV drug Norvir. Abbott raised the price of this essential medicine by 400 percent and the Medicare program is paying the full price because the federal government is barred from negotiating a lower rate.
This week, the U.S. House of Representatives will vote on the Medicare Prescription Drug Price Negotiation Act of 2007, which lifts the current prohibition on price negotiations and requires the Secretary of Health and Human Services to negotiate with drug manufacturers to obtain lower prescription drug prices for people with Medicare covered by private plans under Medicare Part D. The Senate is expected to take up the issue later this winter.
“It’s about time we negotiated drug prices under Medicare,” said Sharon Treat, executive director of the National Legislative Association on Prescription Drug Prices. “Nearly every state in the Nation has done so for years, saving billions and paying far less than the outrageous bill taxpayers are footing for Part D. State legislators across the country are calling on Congress to act swiftly and pass a negotiation requirement that really works. The time for symbolism and window dressing is over—the people are demanding real action and real negotiation based on the VA model.”
The Pharmaceutical Research and Manufacturers of America (PhRMA), the drug industry’s lobbying group, has mounted an all-out attack against this effort to allow Medicare to secure lower drug prices for older adults and people with disabilities.
The Medicare Rights Center, Public Citizen, and the National Legislative Association on Prescription Drug Prices have banded together to fight PhRMA’s public relations blitz by providing the public and the press with the real facts about prescription drug prices.
“Democracy works best when truth wins out,” said Robert M. Hayes, president of the Medicare Rights Center. “The propaganda and lobbying machines of the drug industry have defeated the public interest for far too long. We intend to counter PhRMA’s deceptions with honesty and win for the American people, at long last, fair prices for prescription medicine.”
“The current legislation favoring the drug industry needs to be repealed to require the needs of Medicare recipients to take precedence. A recent Harris Poll finding that only 7 percent of people in this country think the drug industry is ‘generally honest and trustworthy’ says it all,” said Sidney M. Wolfe, M.D., director of Public Citizen's Health Research Group.
In the coming days and weeks, the three groups will provide information and resources to reporters to counter drug industry myths and propaganda. The groups’ first fact sheet will provide a fact check on PhRMA’s claim that price negotiations would severely limit research and development of new medicines.
The National Legislative Association on Prescription Drug Prices (NLARx) is a nonpartisan, nonprofit organization of state legislators from across the country who advocate for lowering prescription drug costs and increasing access to affordable medicines. Legislators from the District of Columbia and all of the New England states plus Pennsylvania, New York, West Virginia, Oklahoma, Texas, Alaska, Arizona, and Hawaii are members of NLARx.
The Medicare Rights Center (MRC) is the largest independent source of health care information and assistance in the United States for people with Medicare. Founded in 1989, MRC helps older adults and people with disabilities get good, affordable health care.
Public Citizen is a national, nonprofit consumer advocacy organization founded in 1971 to represent consumer interests in Congress, the executive branch and the courts.
Truth is the Best Medicine.
Get the facts on prescription drug costs.
Myth #1: Requiring Medicare to negotiate drug prices will cut off funding for the research and development (R and D) of new lifesaving drugs.
1. Drug companies are already spending more than twice as much on marketing and advertising as on R and D.
In 2004, pharmaceutical companies spent, on average, nearly one-third (32 percent) of revenues on marketing, administration and advertising, compared with 14 percent on R and D.[1]2. The drug industry is one of the most profitable industries in the country.
In 2005, the pharmaceutical industry kept 15.7 percent of revenue as profit, making it the fifth most profitable industry in the country. [2] The industry’s high rates of return leave enough room for a significant reduction of drug prices without harming R and D. [3]3. New ‘breakthrough’ drugs, the costliest to develop, actually account for only a small proportion of medicines produced by drug companies.
The majority of drugs that the pharmaceutical industry develops each year are so-called “me too” drugs—modified forms or new uses of existing drugs, which incur lower R and D costs,[4] such as the development of similar drugs following Gleevec, a breakthrough cancer drug.4. The industry exaggerates the role of private drug companies in the R and D of ‘breakthrough’ drugs.
Taxpayer-funded research, particularly by the National Institutes of Health (NIH), forms a significant foundation for R&D by private drug companies. Most of the important new drugs introduced by the drug industry in the past 40 years were developed with some contribution from the public sector. Only 5 out of the 21 most influential drugs introduced between 1965 and 1992 were developed entirely by the private sector.[5]5. The industry’s R and D investment is skewed toward potential for profits.
The profitability of a certain drug is a major factor when drug companies decide how much to invest in R&D, leading to a focus on higher-income populations as a target market and a priority on marketing to doctors and consumers.6. Lowered drug prices would likely spur demand.
Public Citizen cites a study indicating that cutting drug prices by 40 percent for people with Medicare would have a minimal effect on profits due to increased demand. Furthermore, lowered drug prices would induce companies to boost R&D for new drugs to sustain themselves, since the industry depends on research to come out with new and “potentially lucrative” medicines.[6]
[1]Families USA, “The Choice: Health Care for People or Drug Industry Profits,” September 2005.
[2]Fortune 500, April 17, 2006.
[3]Public Citizen, “Would Lower Prescription Drug Prices Curb Drug Company Research & Development?” June 26, 2002.
[4]Congressional Budget Office, “Research and Development in the Pharmaceutical Industry,” October 2006.
[5]Congressional Budget Office, “Research and Development in the Pharmaceutical Industry,” October 2006.
[6]Public Citizen, “Would Lower Prescription Drug Prices Curb Drug Company Research & Development?” June 26, 2002.