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Prescription prices keep going up

May 3, 2007

Albany-- As Lillie Wilson sweeps up her kitchen floor, she admits her daily chores would be much more of a chore if she didn't take her arthritis medicine. "If I miss a day, I'll know it," she said.

Without her daily medicine, her knees ache so much it's difficult to walk, but that medicine isn't cheap. "It's very expensive. Medication is very expensive," Wilson said. She takes seven prescription medicines every day, and she couldn't afford them without some help. "I wouldn't be able to take that medication if they weren't buying it for me. I would just have to go off my medication and look to the Lord."

That's a story her pharmacist hears from many of his customers. David Hays said, "we do see people making decisions as to whether they eat, pay the rent, or take their medication, and that's just something that shouldn't happen in this country." But according to Hays, it does happen in this country more than anywhere else. "Unfortunately, the American consumer pays the highest price for drugs of any country in the world," Hayes said.

He puts much of the blame on drug companies. "I don't like to see government price controls, but we need to have some conscience on the manufacturers pricing for how they price drugs."

An AARP study showed the yearly price of a prescription has gone up an average of $52 a year every year since 2000. So, just one prescription costs $365 more now than it did seven years ago. Hays blames old fashioned greed and marketing costs. Drug makers spend billions of dollars on ads aimed directly at patients, something that used to be outlawed. "I don't think that prescription drugs should be advertised to the public. The physicians need to be the ones to make the decision as to what drug is best for the patient," Hays said.

The Pharmaceutical Research and Manufacturers of America is a trade group that lobbies for pharmaceutical companies. PhRMA gave WALB News Ten this statement. "Direct to consumer advertising empowers patients to be involved in their own health care decisions . . . and helps start important doctor-patient conversations about health that might otherwise not have happened."

The group also touts record spending on research and development and claims only three of every ten drugs that reach the market ever earn enough money to match the research and development cost. David Hays thinks drug companies overstate their R&D investment and overcharge patients. He cites Ambien as an example. One pill of the brand name sleep aid costs $3.80. The exact same generic brand that hit the market just last week costs only $.09.

Hays thinks the drug giants could drastically lower prices and still make a fair profit. "You could see the prices of prescription drugs drop 60 to 80% overnight." That's not going to happen, but there is help for people who can't afford full-priced medicine.

Drug companies, doctors groups, and social service agencies formed the Partnership for Prescription Assistance. In two years it has helped connect more than three million people to programs that provide them with discounted or free medicine.

And then there's Medicare. Lillie Wilson told us, "I think it's good. That's a blessing from the Lord. That's great. Especially people on a fixed income. That's good," She signed up for Medicare's prescription benefit when it was first offered. It's been a lifesaver.

Pointing out her most expensive prescription, Lillie said, "That was $97 if I had to buy that . . . I pay five for it, so see that's a great deal there. That's helping me a lots." And it's helping her live with a lot less to worry about and a little more money to spend.

DID YOU KNOW?

FIVE MOST PROFITABLE INDUSTRIES IN 2006

1. Mining, crude oil production 26.6 (profits as % of revenues)
2. Pharmaceuticals 19.6
3. Commercial banks 16.2
4. Financial data services 15.2
5. Network and communications equipment 14.0

Source: Fortune 500

FIVE MOST PROFITABLE U.S. PHARMACEUTICAL COMPANIES IN 2006

1. Pfizer $19,337,000,000
2. Johnson & Johnson $11,053,000,000
3. Merck $4,434,000,000
4. Wyeth $4,197,000,000
5. Amgen $2,950,000,000

Source: Fortune 500

2006 SALARIES OF C.E.O.s OF TOP FIVE COMPANIES

1. Wyeth, Robert Essner $32,846,962
2. Johnson & Johnson, William Weldon $28,557,749
3. Amgen, Kevin Sharer $24,075,519
4. Pfizer, Henry McKinnell $19,418,446
5. Merck, Richard T. Clark $10,236,740

Source: Filings with Securities and Exchange Commission

The Pharmaceutical Research and Manufacturers of America gave WALB News Ten the following statement about the industry's commitment to research and development. 

"Through research and development, America's pharmaceutical research companies find the new cures and treatments that help those patients live longer, healthier, more productive lives.  In 2005, PhRMA member companies alone spent an estimated $39.4 billion on R&D, while industry-wide research and investment reached a record $51.3 billion.  In contrast, the industry spent $4.24 billion on direct to consumer advertising in 2005."

According to a media company that monitors advertising spending, however, just the top 13 drug companies spent nearly $14 billion in advertising in 2005.  Below are the advertising and R&D expenditures of the top five pharmaceutical manufacturers in 2005.

                                                   R&D                          Advertising

1. Pfizer                       $7,256,000,000         $2,152,469,000
2. Johnson & Johnson  $6,462,000,000        $2,209,254,000
3. Merck                       $4,782,900,000         $768,984,000
4. Wyeth                       $2,749,390,000        $918,817,000
5. Amgen                      $2,314,000,000             NA

Sources: Company annual statements and eMarketer

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