Prescription drugs play a vital role in managing or curing diseases and improving quality of life. But rising drug prices are making many medicines increasingly unaffordable for older Americans.

According to AARP, one in two Americans say someone in their family skipped pills, postponed or cut back on needed medical care because they could not afford it.  Nearly 20% of Medicare Part D beneficiaries delayed or did not fill a prescription because of cost, higher than any other insured group.

Individuals are not the only ones squeezed by drug prices.  Medicare drug plan (Part D) prices for the top drugs prescribed to seniors are 58% higher than the same drugs provided to veterans by the Department of Veterans Affairs (VA), according to a report released by Families USA. Prices charged by for-profit plans ranged from 50% to 1,229% higher than the VA price.

“These high prices devastate seniors who need to take multiple medicines, especially when they reach the coverage gap known as the ‘doughnut hole,’” said Ron Pollack, executive director of Families USA, a national advocacy group. “They are also a rip-off of American taxpayers, who pay for three-quarters of the costs of Medicare Part D.”

“Opponents of Medicare bargaining make two contradictory claims. First, they claim that private market competition under Part D is more effective in reducing prices than Medicare bargaining; and second, they claim that Medicare bargaining would reduce prices so significantly it would harm research and development,” said Pollack. “These arguments cannot both be true and, indeed, neither is true.”

According to the Families USA report, the largest US-based drug companies spent more than twice as much on marketing, advertising and administration as they spent on R&D (13.9% versus 32% of revenues). They retained more in profits than they spent on R&D (17.4% versus 13.9%). In 2005 Pfizer spent 2.3 times as much on marketing, advertising and administration as on R&D (33.1% versus 14.55% of revenues).   Merck spent 1.9 times as much and Abbott Laboratories spent three times as much on marketing, advertising and administration as on R&D (24.6% versus 8.2% of revenues).

Every year the problem becomes worse.  As drug prices continue to outpace inflation, the coverage gap is expanding.  Because of the way the gap is designed, the amount of money individuals must pay in premiums without receiving prescription drug coverage continues to increase.  Manufacturer prices for the most widely used brand-name drugs used by Medicare beneficiaries increased an average of 7.4% compared to the general inflation rate of 2.9% in 2007.

Congress is considering several options that would save Medicare and taxpayers billions of dollars. One is to close the doughnut hole to reduce the amount of time individuals have to pay premiums without getting insurance coverage and to prevent additional people from entering this expanding coverage gap. Congress could freeze the dollar limit of the doughnut hole to its current level.

The Congressional Budget Office estimates this legislation would save $50 billion in direct savings over the next decade, with $6.1 billion of that in federal budget savings. Currently, the bill has 25 co-sponsors from both parties.

Without a change in government policy, Americans will continue to import cheaper prescription drugs from other countries with no guarantee of safety. Legalizing importation would provide those who are not yet eligible for Medicare Part D with another viable option to obtain safe, lower-cost drugs.

Reprinted by permission of Aging Arkansas- June 2009AGING