Senior citizens long have been targets of cruel scams perpetrated by credit merchants, fast-talking telemarketers, fraudulent charities and other sleazy operators who scheme to separate retirees from their meager pensions and savings.
But these devious “backdoor” merchants may not be the seniors worst nightmare. That title might be better attached to the “respectable” white collar executives who run the nation’s major pharmaceutical companies that continue to gouge senior citizens with inflated prices for prescription drugs.
Families USA which closely monitors drug costs found that the prices for the 50 drugs most often prescribed for seniors rose on average more than twice the rate of inflation last year. These increases are on top of price hikes that have consistently been above the rate of inflation throughout the 1990s.
While rising prices for prescriptions affect the entire population, seniors are the hardest hit. Although seniors represent only 13 percent of the total population, they account for 34 percent of the all prescriptions dispensed and 42 percent of all prescription drug spending.
More than one-third of the most prescribed drugs for seniors rose in rice at least three times between January 000 and January 2001. The rice of Synthroid (a synthetic thyroid agent) rose 8.5 times inflation and Alphagan used to treat glaucoma rose 8.4 times the rate of inflation last year. Glucophage, prescribed for the treatment of diabetes, went up 4.8 times inflation and Demadex, a diuretic, 4.6 times.
The rising prices are increasingly making needed drugs unaffordablefor senior citizens. This means that the health of millions of senior citizens, particularly those who exist on fixed incomes, is being placed at risk. Social security and pensions stretch only so far and, often, it is an expensive prescription drug and health–that must be put aside to meet other basic necessities.
Some seniors who live near our northern border are resorting to bus trips to nearby Canadian cities where prescriptions can be filled for half the price charged in the U. S. In addition to having a health care plan that covers all citizens, Canada doesn’t allow drug companies to take crude advantage of their citizens. Not only does Canada have a health plan that can negotiate lower prices through bulk purchases, but it has a national price review board which ensures that drug companies can’t get away with price gouging as they do in this country.
The pharmaceutical industry is adept at promoting the idea that the rising drug prices in the U. S. are the result of the companies’ expenditures for research. The hard numbers don’t support this transparent public relations ploy.
“The drug industry likes to claim that high prices are needed to pay for research and development, but these price increases have much more to do with corporate profits than the research costs for these drugs that occurred many years ago,” the executive director of Families USA Ron Pollock says.
In fact, the pharmaceutical industry is the most profitable in the nation. Profit margins in the industry in 2000 were four times the average of Fortune 500 companies. What’s more compensation packages for their executives are lavish.
Merck and Company, Inc. allocated 15 percent of its revenue to marketing, advertising and administration and only six percent to researchand development. Pfizer allocated 39 percent of its revenue to marketing, advertising and administration, 15 percent to R&D. Bristol-Myers Squibb and Company spent 30 percent of its revenues on marketing, advertising and administration, 11 percent on R&D. In all, eight of the nine companies that market the top selling drugs to seniors spent more than twice as much on marketing, advertising and administration than on R&D.
The Chairman of Pfizer, William C. Steere, Jr., led the pack of highest paid drug company executives with annual compensation (exclusive of unexercised stock options) last year of $40,191,845 followed by John R. Stafford, Chairman and CEO of American Home Products Corporation, $27,008,927; Edward M. Scolnick, Executive Vice President of Merck and Company, $26,454,600; and Richard Jay Kogan, Chairman and CEO of Schering-Plough Corporation, $21,444,020.
C. A. Heimbold, Jr., Chairman of Bristol-Myers Squibb Company is champion holder of unexercised stock options in the industry with options valued at $227,869,513. Raymond Gilmartin, Chairman, President
and CEO of Merck had unexercised stock options of $181,252,976 and William C. Steere, Jr., Chairman of Pfizer, $130,944,439 of options. Consider further that George Bush and most Republicans want to cut the
already low capital gains taxes on such bosses.
The pharmaceutical industry’s claims about its research and development expenditures are diminished by the fact the federal government has given the industry generous packages of tax credits, massive taxpayer-funded
R&D support by the National Institutes of Health and other federal agencies, subsidized loans from the U. S. Import-Export Bank and R&D monopoly patent extensions.
The idea of providing prescription drugs in some manner as a medicare benefit is a live political issue both in the Congress and the White House. Clearly, there is a need to curb the pharmaceutical industry’s appetite for high prices, high profits and massive executive compensation if there is to be a workable affordable solution.