Jul 5, 2004
Drug prices are up three times the rate of inflation over the last 12 months, according to a new study by the American Association of Retired People. Some of the top-selling drugs most often used by seniors had price increases, like a 7.9% increase for Plavix, a blood thinner made by Bristol-Myers Squibb.
Why have drug prices gone up on many of the drugs used by the older part of the population? These price increases could not have been based on new research, because these drugs were already-existing drugs.
What changed is that the senior discount card went into effect on June 1. A few seniors are supposed to get a discount on their prescription drugs, making their medical expenses cheaper. In reality, they will get a discount on prices that have been already increased to make up the difference.
When Congress passed this Medicare program, it gave yet another gift to the drug industry. The Medicare administration is not allowed to bargain for a better price on drugs, as big companies do. By 2006, when the full "discount" program is supposed to go into effect, Medicare is expected to account for half of all drug sales. The program means that one of the most profitable industries in the country will gain new sales and new profits. They have a year and a half to push up drug prices.
In fact, this dramatic price increase is not the first time we have seen such a result in the medical field. When Congress passed the original Medicare legislation in 1965, it was supposed to cover our health care in old age. In fact, within five years of this bill passing, the elderly were paying as big a share of their income for medical care as they had been before Medicare was enacted. Today Medicare covers only about half the medical expenses of those over 65, not counting the cost of prescription drugs.
The senior drug card will end up like other health care reforms – transferring money from our pockets – and from government coffers – to drug companies, hospitals, health care providers and medical equipment manufacturers.