Medicine costs hit new heights
Bosses try to make retirees pay for drug benefits
By John Catalinotto
Drug monopolies stand on one side, raising the cost of
medicines each year by almost 20 percent. On the other side are
other big manufacturers and banks, angry about making big
payments for prescription drugs for their retired workers.
Who's suffering when these two giants fight? The retired
workers.
The big companies are dumping the rapidly growing costs of
medications in these former employees' laps.
The question is whether the workers will be able to wage a
successful campaign against both their own former bosses and
the drug makers to assure affordable health care.
There is little doubt that the pharmaceuticals are the
leaders in price-gouging and profit-making. Costs of
prescription drugs leaped from $102.7 billion in 1998 to $154.5
billion in 2001.
To bring about this 50-percent jump in the total annual cost
of prescription drugs in the United States the pharmaceutical
companies have:
(1) increased the price of individual drugs
(2) encouraged the use of costlier drugs
(3) encouraged an increase in prescriptions.
For companies that had promised their retirees extensive
health insurance plans, the soaring drug costs have created an
unexpected expense. The cost increase's initial impact was to
decrease these companies' profits as it increased the profits
of the pharmaceuticals.
The first thing the bosses try to do when they fight each
other is to make the workers pay. Companies, from Morgan
Guaranty Trust Co. to the Ford Motor Co., have been trying to
dump the costs on their retirees by demanding bigger
co-payments, raising deductibles and limiting the coverage that
had been promised. (New York Times, May 10)
Non-union retirees have been hit with the first cuts,
because they are not covered by contracts. Ford executives
recently told 50,000 non-union retirees that they must pay
premiums of $5 to $150 per month for health insurance or choose
a plan with a high deductible.
How the pill pushers do it
Apologists for the drug monopolies claim high drug prices
encourage and fund research and improve the available
medicines. A closer look shows that there is a big gap between
the strategy to maximize drug profits and providing the best
medicines to the public.
The monopolies give priority to profits.
When pharmaceuticals succeed in getting a patent on a new
drug they are able to charge monopoly prices as long as the
patent lasts. Often the cost of manufacturing these
pharmaceuticals is much smaller than the drug's unit price.
This was obvious in the case of drugs for treating
AIDS-related illnesses. Other companies could provide these
drugs for 70 percent less than patent holders Merck and Co.,
Bristol-Meyers Squibb, Glaxo-Wellcome and others charged, and
still make profits.
When a drug monopoly patents a new drug with a potentially
large market, it pursues an aggressive strategy--not to
maximize health, but to maximize its profits. The key to this
strategy is to sell as much of the drug as possible during the
period the patent is in effect at the highest monopoly
prices.
This strategy includes using a big sales force to push
doctors and other health-care providers to write prescriptions
for the drug. The companies grease the way with free samples
and gifts.
They also fund research groups at university hospitals. And
since the advertising laws were loosened in 1997, they can also
run heavy promotional campaigns, especially television
commercials directed at the consuming public.
Perhaps the clearest example of drug-company abuse can be
found with the allergy drug Claritin. Even studies run by
Claritin's maker, Schering-Plough, showed that at most only 50
percent of the people who used it got allergy or cold relief.
The ads, of course, don't highlight this fact.
Schering-Plough spent over $100 million a year to push
Claritin on the public in direct advertising. It also spent
millions to encourage doctors to prescribe Claritin.
In the past two years, with the patent due to run out, the
company raised prices on Claritin eight times.
It's the same story with other drugs. In 2000, Merck spent
more money to directly advertise the arthritis drug Vioxx--$161
million--than Coca Cola did to sell its soft drinks. Pfizer
spent $90 million on its anti-impotence drug Viagra.
Indeed, eight of nine major pharmaceuticals in a Families
USA consumer health study spent more than twice as much in 2000
on marketing, advertising and administration than they did on
research and development.
So much for the argument that the high prices are needed to
fund research.
This advertising does nothing to advance health care. It
does, however, increase the price of the drugs.
Canada has laws that limit the price of drugs. As a result,
medicines are often sold there much cheaper than the same ones
in the United States.
In a border state like Maine, patients too poor to afford
prescription drugs at U.S. prices are organizing buying trips
to Canada. According to a report in the May 11 New York Times,
one such run recently saved 25 people a total of $18,000.
But it's no long-term solution to the crisis, even for
retirees who live near the Canadian border.
In the 1980s and early 1990s, militant mass AIDS marches and
in-your-face direct actions by activists demonstrated that a
struggle against capitalist barriers to health care can win
concessions. And it raised consciousness regarding the drug
companies' greed.
But the sky-high prices of necessary medications for
retirees is just the tip of the iceberg of an even bigger
health-care crisis in the United States. Health care as a whole
is becoming a luxury that fewer and fewer working and poor
people can afford.
If all those affected by this crisis coalesced in
struggle--retirees, the millions without health insurance,
people with AIDS, oppressed communities and others, together
with health care workers and their unions--a powerful battle
could be joined that could transform the delivery of
life-and-death care in this country.
Reprinted from the May 23, 2002, issue of
Workers World newspaper
This article is copyright under a Creative
Commons License.
Workers World, 55 W. 17 St., NY, NY 10011
Email: ww@workers.org
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