Guest Column: Prescription drug costs put senior health care in jeopardy

Guest Column: Prescription drug costs put senior health care in jeopardy

By Dr. Joseph Orthoefer

Do you know a senior citizen having problems paying for prescription drugs? Polls reveal drug costs are the most important problem facing senior citizens today, and studies show Illinois to have one of the largest percentages of seniors lacking drug coverage. The latest state Republican initiative does nothing that is not already being done to help the nearly one million seniors who are without prescription drug coverage. Most senior centers and local area agencies on aging are already helping seniors get into existing discount programs.

The present programs are confusing and very limited.

The state’s Senior Care and Circuit Breaker programs reach less than 10 percent of the senior population. To qualify, one must be in poverty with an income below $17,720 per year for a single person and $23,880 for a two-person household. Those with incomes more than $17,721 up to $21,218 for a single-person household, $23,881 to $28,480 for a two-person household, and $35,740 for a three-person household, qualify for Circuit Breaker if the individual has the right disease. Circuit Breaker participants pay $3 per prescription with a $2,000 coverage cap, after which the senior must pay 20 percent of the cost of each prescription. The Circuit Breaker Program, originally projected after passage in 2000 to cost $50 million, actually cost $150 million.

Surprisingly, nothing is done by current state programs to control prescription prices. The shortfall in the 2003 budget for the state social programs is projected to be $150 million, but most of this could have been made up by passage of HB 2236, “the Senior Citizen Drug Discount Program,” which has passed the House. Similar to legislation in Florida, it is projected to save the state of Florida $115 million annually. The Illinois bill provides that any senior can enroll for $25 per year to be eligible to purchase drugs at a state-negotiated price, usually 35 to 50 percent less than the present pharmacy cost. Seniors would have no coverage caps, no benefit limits, and no confusing copayment schemes. The philosophy is similar to the cooperatives used by farmers for many years. Because the state program would purchase drugs at the negotiated price, major savings would be created for the state. The program would be administered at no cost to the taxpayer. One objection being raised is that the drug companies are taking the states that pass similar bills to court. However, the states are winning most of these suits.

At the national level, the House passed HR 4954, “the House Republican Plan.” As one commentator noted, this bill was passed “to muddy the issue” and confuse seniors by tricking them into thinking something was being done. Yet, it will help no one. To illustrate, the premium for seniors who opt to purchase the plan from a private insurance company would receive the following benefits for their $33 per month or $396 per year premium. After a deductible of $250, they would now pay 20 percent of the prescription cost up to a total $1,000 expenditure for drugs. To simplify, if their drug bill was only $1,000 for the year, they would receive a benefit of $214. The story gets even worse if their bill is higher. The plan will cover only 50 percent of the cost between $1,000 and $2,000, and between $2,000 and $3,700, there is no coverage. Drugs covered depend upon the plan offered by the private insurance company.

Pressure is mounting nationally for a prescription drug bill as part of Medicare. To help you evaluate the various programs, the National Association of Area Agencies on Aging has adopted the following principles that should be included in any legislation:


l Medicare should guarantee access to prescription drugs as a part of its defined benefits under the part B program.

l Medicare’s drug benefit should provide comprehensive coverage, including the most current, effective and individually appropriate drug therapies.

l Medicare’s contribution toward the cost of prescriptions must keep pace with the increase in the cost of drug products and not be tied to budgetary caps.

l The addition of a Medicare drug benefit must not reduce the access to other Medicare benefits.

Coverage and Affordability

l The Medicare prescription drug benefit should be available to all Medicare beneficiaries regardless of income or health status. Sufficient subsidies should be provided for low-income beneficiaries to insure their ability to utilize the benefit.

l The Medicare prescription drug benefit should be voluntary and provide safeguards against the erosion of current drug coverage provided through other sources.


l The new Medicare prescription drug benefit should be administered in a consumer-centered way and carefully monitored to assure overall high-quality care.

l The Medicare program should include appropriate cost-containment measures while affecting considerable cost savings resulting from bulk purchasing.

Quality and Education

l The Medicare Program should strive to prevent the overuse, under use, and misuse of prescription drugs.

l The legislation should require that educational programs be provided to beneficiaries to prevent the overuse/abuse of prescription and over-the-counter drugs, and adverse drug reactions (i.e., alcohol taken with prescription drugs).

Before anyone begins to feel sorry for the drug companies because the government might reduce their profits, the public should know they are the most profitable of all American industries. Their percent of return on revenues is 15.5 percent compared to Fortune 500 companies’ medium return of 3.3 percent.

Pharmaceutical manufacturers spend just 11 percent of their revenues on research and development of new drugs, but 27 percent of revenues on marketing, advertising and administration. Tax breaks have reduced their effective tax to 17.1 percent, less than that paid by the average taxpayer. Meanwhile, the number of new drugs that offer significant clinical improvement over existing therapies coming on the market has actually decreased.

While many senior citizens cannot afford the high price of drugs, executives at the drug companies excel in greed. To name a few:

Company Average compensation per executive

(most have multiple executives)

Abbott $4,247,409

Allergan $4,536,450

Bristol-Meyers $14,874,834

Eli Lilly $2,344,902

Merk $1,971,055

Pfizer $15,688,335

Pharmacia $2,568,125

Schering-Plough $3,724,997

Wyeth $9,144,196

Unfortunately, drug companies are among the biggest contributors to the political parties, which is the reason legislation to help is so difficult to pass. Politicians who refuse to help because they are corrupted by pharmaceutical money should be voted out of office.

Contrary to what some say, our health care system is not the best in the world; it is ranked 37th by the U.N., comparable to many Third World countries. The U.S. does rank number one in one area, however: cost, which is about double that of any other developed nation.

Statistics show the result of our lack of accessible health care: that our mortality rates for almost all disease indicators are higher than those for any other developed nation. Access to needed prescription drugs can go a long way to improve the health of seniors. Our best hope for improving the health care of our senior citizens is through legislation that makes access to the health care system affordable for all. In Illinois, passage of HB 2236 would make prescription drugs available.

Dr. Joseph Orthoefer is the former public health administrator for Winnebago County.

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