Getting Out of Reach
Prescription drug prices are rising much faster than the rate of general consumer inflation. The most heavily affected are those who can least afford it, like older Americans living on fixed incomes, and the working poor with inadequate or no health insurance. The rise in drug prices is causing the public to ask why. The reasons include the immense research costs, consumer advertising and the growth of managed care.The continue rise in prescription drugs costs has touched off intense public debate on how best people can get some relief. Some politicians and consumer groups have pushed for some form of price controls. Drug companies oppose price regulations. They contend it would restrain innovation in an industry that invests billions of dollars annually on research.Joe Madera, a retired man in his late 60s living in Pomona, CA, pays more than $250 a month out of pocket for prescription drugs to maintain his diabetes under control. Medicare covers his doctor bills and any hospital visits, but the federal health program does not cover prescription. While this man's household income is fixed, the cost of his medication just keeps going up.Most Americans do not feel the increase in drug prices directl
Many health insures have blamed higher drug cost as the reason behind hikes in medical premiums or restriction of benefits. y because they purchase prescription medicines through their employee health plans or their HMOs, where they do not pay the full price, often making only a $10 or $20 co-payments. "The situation is really discouraging," he says. The Federal government needs to step up and impose some kind of price control. As result of that, pharmaceutical companies have tried to regain some of this lost revenue by charging more to people without drug coverage who must pay full retail prices. Creating a complex, genetically engineered drug versus producing a conventional drug is like the difference between manufacturing a Ford Escort car and designing a fine German Mercedes-Benz. According to Los Angeles Times newspaper, managed care now covers 60% of the insured population in the United States and even higher percentage in California. In addition to that, politicians have to find the way to give to people like Joe Madera some relief. According to a study by the National Institute for Health Care Management, the 10 most heavily advertised drugs accounted for about 22% of the total increase in drug spending in the last five years. Soon, these new treatments became the accepted standard practice. For the drug companies, these research duds are necessary cost of doing business. Only one medicine out of five makes it through human clinical tests, a representative for the Pharmaceutical Research and Manufacturers of America argue. Large HMOs and other managed care plans use their bargaining power to demand discounts when they make bulk purchases of prescription drugs. New drugs typically require several phases of tests on humans to demonstrate that they work and do not produce serious side effects.
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