October 06, 2004

GAO Drug Price Analysis Finds Huge Cost Jump for Seniors, All Americans

Senators call for action in Congress this year on safe re-importation of medicines, bargaining power for seniors

Washington, DC - New information from the non-partisan Government Accountability Office (GAO) details skyrocketing prescription drug costs, particularly among brand-name medicines, and is prompting calls for action in Congress to reduce the cost of drugs for senior citizens and all Americans. U.S. Senators Ron Wyden (D-Ore.) and Byron Dorgan (D-N.D.) released the GAO analysis today and pointed to increases of more than 20 percent in drug prices from January 2000 to June of this year - 26.4 percent for brand-name drugs - as evidence that legislation demanding bargaining power for seniors and safe re-importation of medicines should be addressed in Washington this year. "These numbers from the impartial GAO quantify the hurt that American families, and particularly our seniors, are feeling as spiraling drug costs further bust their budgets every month," said Wyden. "The cost of brand-name drugs is increasing at three times the rate of generics. America's seniors and working families can't wait until the next session for action from Congress - they need bargaining power and safe re-importation now." "The GAO report makes clear that this problem, which already threatens the health of millions of Americans, by placing prescription medicines out of reach because of needlessly and excessively high prices, is getting worse, not better," Dorgan said. "Congress must act and it must do so soon. Americans urgently need access to lower priced prescription drugs." Among the GAO's findings: - The usual and customary price of medicines, which is the price Americans pay at the drugstore with no discounts or insurance, rose 21.8 percent for Medicare enrollees, and 22.8 percent for Americans not using Medicare. - The price of brand-name drugs rose at more than triple the rate of generic drugs, increasing 26.4 percent from January 2000 to June 2004, compared to 8.3 percent for generic drugs during that time period. Wyden and Dorgan are calling for action in this Congress on legislation available now to help seniors and all Americans better afford their medicines. Earlier this year, Wyden and U.S. Senator Olympia Snowe (R-Maine) introduced the bipartisan Medicare Enhancement for Needed Drugs Act (MEND Act) to strengthen the drug coverage offered to seniors under the Medicare prescription drug benefit. MEND would grant the Secretary of the U.S. Department of Health and Human Services (HHS) the specific authority to negotiate lower prices for drug purchases through Medicare, create incentives for participating Medicare plans to negotiate the best possible drug prices, institute penalties on drug manufacturers that try to limit access to lower price re-imported prescription drugs, and give Congress and seniors ongoing information about the prices of prescription drugs across multiple markets. Dorgan and Snowe are the primary sponsors of legislation that would allow the importation of lower priced FDA-approved prescription drugs from Canada, and eventually other major industrialized countries. The GAO analysis released today is the first installment of an ongoing monitoring project requested by Snowe and Wyden last year to track changing drug prices before and after implementation of the 2004 Medicare reform bill. The next stage of the GAO study, due in December, will compare wholesale and retail prices to understand where and how price increases occur.