Drug prices for elderly rise twice as much as inflation

The Medicare Drug Prescription debacle ("Part D") was supposed to keep drug costs down by introducing competition. Write this bigger and you have John McCain's health care plan. But back to Part D. The American Association of Retired Persons (AARP), the lobbying group for geezers like me that I resigned from because they backed this same Plan D some years ago, has now found that under the intense competition, prices for oldsters like me have risen double the rate of inflation since the program went into effect:

The increase in average prices paid by wholesalers and direct buyers was the highest in at least six years, according to the report released today by AARP, a nonprofit lobbying group for people age 50 and older. The Washington-based group tracked the top 220 brand-name medicines used by elderly and disabled Americans in the government's Medicare program.

[snip]

``Medicare Part D is helping millions of people afford their prescription drugs, but as brand name drug costs continue to soar more needs to be done to keep drugs affordable,'' said John Rother, AARP's director of public policy, in a statement.

All except four of the 220 medicines reviewed by the AARP went up in price last year. The average wholesale cost of 169 drugs that have been on the market since 2001 rose by more than 50 percent from 2002-2007, adding about $1,600 to the cost of treatment for a patient taking three prescriptions. (Bloomberg)

So we old people are being raped by Big Pharma -- again. Big Pharma has long recouped their R&D fees, fees they in fact seldom incur because it is small innovative biotech companies that actually research the drugs and the big guys buy the licenses. Good examples are the two neuraminidase inhibitor influenza antivirals, Tamiflu and Relenza, both marketed by Big Pharma but both researched and developed by small companies. The money doesn't go into research and development. It goes into marketing and profits.

Any reform of the health care system which delivers us into the hands of private insurance companies and drug companies is bound to break the bank. It is a conduit for money from our pockets into private coffers. We need a single payer system. No private insurance. Controlled buying of drugs by one source. Not perfect, perhaps, but far ahead of what is in second place, touted by the two Democratic candidates. As for the Republicans, they we can solve medical care costs by introducing competition. Just like we did with Part D.

And that's what we'll get if McCain is Abel.

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Big pharma is about maximizing company income.

Imagine that you are an accountant. You know that company income is the profit per item multiplied by the count of items sold. Your research item advises you that:

At $X profit per item 1000 items will sell.
At $2X profit per item 800 items will sell.
At $3X profit per item 400 items will sell.

Problem. At what profit per item should you price your product? (the solution is probably about $2.2X)

So the problem for us is to change the outcome of that calculation.

The solution is not my expertise. Possibly introduce a "supertax" if the profit per item exceeds 20% of production (including amortization) cost. Or maybe a reward that rises with market penetration. Or something else.

Or Revere it might be that we ought to get out of the healthcare business for citizens entirely. You talk about this costing the old people more. So, they do away with that part and then they cant eat or have a place to live because they will have to pay taxes to pay for the supposed benefit..

The word is ENTITLEMENTS...And they aint in the constitution. UK and Sweden have Single Payer plans and now they are both talking about going to "Basic Care" due to the costs. That is to say you might see privatization of their healthcare as well. My big fear is that pandemic comes along and takes out all the little taxpayers of the future and then what? Cant tax the dying, they'll surely get the last laugh on that one.

Healthcare is a service, not a privilege. We are going to get down to serious decisions here soon and it will be to the detriment of the old people soon. One fine day we gave them the prescription drug benefit and Big Pharma raised the price right up and a little beyond what the benefit paid. Still is going to cost us one trillion dollars in yesterdays bucks. If inflation raises any higher it will be 20 billion more in 5 years So whats next Revere? A takeover of all the corporations when they dont do something you like?

By M. Randolph Kruger (not verified) on 07 Mar 2008 #permalink

Once a year, I take a sheet listing drugs we take to Costco, Sam's, Meijer and Walmart, and ask them to write the prices for a one month supply and then for 100 and 300 tabs/caps. Then I choose the cheapest place and buy there.
Unfortunately, I can only get the cat's pills at one place, and he costs us a mint.

How can the cost of prescription drugs rise just for seniors on Medicare? I realize the item is from AARP and it is counting drugs normally used by the elderly (I'm almost 54, am I elderly?)? Are all drug prices rising or as the post implies are the drug companies singling out seniors on medicare? Just curious.

By pauls lane (not verified) on 07 Mar 2008 #permalink

These are the drugs that seniors take. If you are younger and also take blood pressure meds or Type II diabetes drugs it will also affect you but the survey pertained to the kinds of drugs most used under Medicare Part D, i.e., by seniors. I have Medicare but didn't sign up for Part D (the drug plans) because I am still working and have health insurance at work with prescription drug benefits that are better than any Part D plan. The question being addressed, though, was whether the supposed principle behind the plan -- that competition between drug plans would bring prices down -- didn't seem to be the case. Just the reverse. Most of these are old drugs, not new ones.

AARP, a nonprofit lobbying group for people age 50 and older

AARP is an insurance company, and not much more. Hearing them complain about rising drug costs is like hearing the airlines complain about the rising cost of jet fuel. And their approach is much the same... raise their rates.

MoM-Indeed, thats exactty what it is and it positions them to be in the drivers seat if UHC is in place because they will have the jump on the elderly because of their lobby. Nothing ever changes, it just shifts a bit back and forth. UHC is a GREAT idea but no one ever comes up with a way to pay for it. With the elderly going to outnumber the young by 10-12 to 1 and its an arguable number, but any number past 4 makes it a economy burner. No way the kids can pay to take care of us so the age limit gets raised, the coverage level decrease and we get socked with the biggest tax increase in history to pay for it. Then we will be unable to pay for anything else but that.

Flat tax for everyone based upon consumption and do away with income tax and then Revere I would be in. Else its just another progressives redistribution of wealth program and doomed to fail.

By M. Randolph Kruger (not verified) on 08 Mar 2008 #permalink

A society that preys on it's poor and elderly is beneath contempt. If thats what a "Christian" nation is then they must have issued a new bible, seems different from what I recalled reading.

Before Plan D and medicare used a discount card, drug prices were 3-4 times what the Department of Veteran Affairs paid, and twice what the non-governments most favoured customers paid (HMO's, large insurance companies).
Some discount.

Plan D decided to not allow the market power of 44 million to negotiate best prices. This is obviously to benefit the drug companies and insurance companies, who work hand in hand. It seems that when government talks free markets, it means giving corporations the freedom to be price makers and consumers to be price takers (whats good for the corporations is good for the economy-right?). Any savings the seniors are likely to have made on the new plan are likely to be inflated away. Free markets only work to contain prices when their is real competition, but when most industries are controlled by 5 or fewer companies making up over 40% of the market, prices will inflate. FTC did as study in the 60's showing that when the top 5companies in a industry made up less than 40% of the market, then prices would be reduced by 25% (they thought of it as a bad thing at the time, since they were created in 1913 to prevent unfair competition, ie price cutting)

It would be nice to see a breakdown of what the seniors are paying today, relative to other government agencies and the drug companies non-government most favoured customers, as well as those who are uninsured and pay out of pocket. But this information seems difficult to come by.

http://www.house.gov/visclosky/report.htm

The elderly make up 12%-14% of the population, and today our government already pays 50% of all health care costs.
Going to a UHC will mean a redecution on the money that is being spent on health care as a percent of GDP, not more. And consider that companies like GM are moving production across the border to Canada, despite it's higher tax rates, due to lower employee health care costs, and consider that going to a UHC will eliminate the competitive disadvantage our corporations in the productive economy are under, or at least whats left of it.

We do not have to borrow money to pay for it either. Congress can just exercise their constitution right to create money, call it legal tender and a supplement to the current dollar controlled by the private banking cartel known as the Fed. They can issue it pay for all health care costs (and the Fed banks will be required to accept it since it is also legal tender, but they will not be able to monetize it by creating addition money from it as under the current system). The money corporations and individuals save could be used to stimulate the economy and lift us out of the coming depression. We might even bring some of those jobs from the productive economy back.

PFT-The dollar has been devalued so much in the last 8 months that I dont think we want to run the printing presses again. The Fed exists because of central bank provisions created by the Congress. No, they want to have their goat so that when you raise the interest rate continously for two years, someone takes it in the shorts. You have someone to blame.

Part D. is a joke and will be whittled away in the next administration because there is no way we can afford another 200 billion a year, even if they took it from the DoD. The absolute best that can be hoped for is that we cut spending across the board. We need to raise the value of the dollar and then we can buy the things that we patented here, made somewhere else because of the costs and then imported. Another thing is that if the costs rise here, they will rise in Canada, the UK, etc. because they are in the same boat. There is a certain number the Pharma people want and they'll get it. The only diff here is that we have the right to just say no.

Wont matter because UHC/Medicare will be bankrupt in 5 at the rate we are going. Raise taxes, cut benefits will be their answer.

http://www.washingtonpost.com/wp-dyn/articles/A9328-2005Feb8.html

You realize of course we wouldnt have these problems at all if we simply told the new GenX's that say starting after Jan 1, 09 that there will be NO Social Security and NO Medicare when they hit 65. They can create health savings accounts, that will bail out the banks, and you get to move it but you can never use it until you are infirmed or at age 65. Yep, you still pay in but it goes to a private account and not into the hands of the government. Need to do it if for no other reason than to keep it out of governments hands. We already know what they do with money that they do have. First they think its theirs, they go spend it. When its gone, they want more. They have stolen in every administration and I include Carters especially when it was "fixed". Uh-huh.......

This time it wont be Mediscare... It will be real. We need to get the people off the government dole and this is one of them. For a government to survive it has to be flexible and we keep locking ourselves in with either social programs or military for all of the available money. This leads to the deficits. Then they tax and that shuts the economy down having already raised the interest rates. You get taxes and high interest rates and we are done. The newest? Carbon Taxes......Just like the taxes that created the Energy Department and they are still taxing gasoline/fuel like it was the 70's. Where please is the energy that was promised. No results? Cut the taxes out.

Bullshit.

By M. Randolph Kruger (not verified) on 08 Mar 2008 #permalink

If physicians stopped presribing those marginal but very expensive drugs with NNTs (number needed to treat) > 30-40, that would help bring down those health cost numbers.

Marissa: If you say "marginal" you are implying they have a marginal utility (which may well be small). But the social contract of the physician with his or her patient is to treat them, even if the net benefit is small. If their plan pays for it then that's what they should do. The drug companies in the US know this and advertise heavily to the public for prescription drugs on the grounds it influences both patients and doctors. So that should be illegal and if we don't want docs to prescribe these drugs, then the plans and insurance companies should not cover them. Why put it on the doctor?

Indeed, why put it on the Doctor. the drugs that we "need" were invented by them and scientists. If we did nothing you would still need them and you wouldnt get them because they are too expensive is the thrust of this.
.
On the other hand Revere it is supposed to be a free country. Pharma's argued sucessfully that they like any other companies except for indirect air carriers should be allowed to advertise. The thought being that like say Coke which we know aint the greatest thing to be sticking in your body, does it legally. It contains either aspartame, sugar, carbon dioxide and probaby harms your innards in some way.

The other part was that it supposedly drove up medical costs to advertise and increased the total intake of drugs into the patients. Well likely thats true. But then we are dumb enough to take them and thats called self determination. We get to choose what we do. There is always someone around that wants to keep you from doing something that you might want to do. If you contest them on it, you are too stupid and cant take that Advair because it costs too much and it is overpriced. You are too dumb, dont go to Cancer Centers of America. If you are there you are already history because they only take the rejects from all of the other cancer clinics. Its also not economics. Someone has to make money, someone has to pay it. But only if you want to live. The post is about the elderly. Well, we are mostly elderly and we are spending money on everything from the DoD to bridges, dependent children, and of course Social Security and Medicare. Everytime we spend a dollar, inflation goes up. So the horror is that we are about to see runaway inflation and its going to get down to taking care of the kids or our old gray asses. And to what end? We are mostly non productive after about 65 so what for? We stick around and we saddle them up with one hell of a lot of problems.

But in the meantime lets control that advertising... It costs too much. Corporations by spending the money generate taxes. They generate taxes by having our dumb butts buying their products. Sales taxes, income taxes. And we have the second highest corporate taxes in the world. Thanks John Edwards. .

http://www.reuters.com/article/latestCrisis/idUSN28439707

Here is an excerpt.

""The excessive costs of prescription drugs are straining family budgets and contributing to runaway health care costs," Edwards said at the start of a seven-day campaign tour of the early-voting states of New Hampshire and Iowa.

"With such aggressive and often misleading drug company marketing, it's too easy for advertising -- instead of doctors or proven results -- to influence families' health decisions," Edwards' campaign quoted him as saying."

Now this is from a guy who spent his early life as a litigation attorney going against doctors and pharma. But still its the one key here and that is the assertion that they are doing something wrong. Its taking money away from the elderly. . There are plenty of laws already on the books about advertising and they were put there for the original snake oil manufacturers. And you know what, we get into the situation of saying that drug prices are too high. Thats only if you need them. This goes back to many postings about this one thing. This truly proves its a service and not a right.... If they didnt make it because they couldnt make money would it be a service or a right then? What if they just up and said screw you, we aint going to make insulin any more.

If you need an answer to that one, then run on down to the local Communist Party headquarters.

By M. Randolph Kruger (not verified) on 09 Mar 2008 #permalink