Lowering the Costs of Prescription Drugs

Health care costs are increasing at such a quick pace that families, small businesses, and state budgets cannot possibly keep up. A disproportionate amount of those increases can be attributed to the skyrocketing costs of prescription drugs.

While the large pharmaceuticals spend up to a third of revenue on frivolous advertising at the cost of research and development and offer their CEOs huge compensation packages, New Hampshire's families struggle to pay ever-larger copays and New Hampshire's small businesses struggle to continue to provide coverage to their employees.

The biggest factor in exploding insurance costs: prescription drugs

Fact:  Since 1995, national spending on prescription drugs has grown by over 10 percent every year, more than double the rate of growth for other health services.¹

Fact:  Between 1995 and 2000, 30 percent of the cost increases in health care can be attributed to the rising cost of prescription drugs.²

Fact:  One out of every five persons in New Hampshire lives without prescription drug coverage.³

Fact:  Since 1991, average retail prices for prescription drugs have grown twice as fast as average monthly Social Security benefits for elderly couples.⁴

Fact:  Seniors are in need of prescription drugs the most, but 196,000 non-senior New Hampshire residents lack prescription drug coverage.⁵

Fact:  New Hampshire residents paid $406 million in 2000 to brand name drug makers. If average citizens received the same discounts that drug companies give the federal government, Americans would have saved $149 million in 2000.⁶

Big Drug Companies Increase Ads, Profits

Pharmaceutical companies are finding ways to charge patients more than ever, while taking in huge profits and diverting revenue to advertising. These expenses drive up prices for consumers.

Fact:  In many cases, the big drug companies are now spending two to three times more on advertising than research and development.

Fact:  At the same time that drug companies charge price increases upwards of 12% a year, their CEOs are taking home a bundle.

The Solution: Elect and support officials who will Establish Fair Market Drug Prices

On average, 70 million Americans without prescription drug coverage pay twice as much for their prescription drugs than the federal government. Fair Pricing legislation for prescription drugs targets the sources of the problem by directing state government to use its bulk purchasing power to negotiate steep discounts and pass the savings on to consumers.

Fair Drug Pricing in Action: Maine

Maine's recently adopted program offers federally negotiated Medicaid prices to low and middle-income residents. More than 100,000 people have already enrolled in the program, which offers savings of up to 25 percent on drug purchases.

Fair Drug Pricing in Action: Vermont

Vermont recently passed a "Healthy Vermonter" bill, which requires pharmaceutical companies to disclose gifts and fees or subsidies given to doctors, hospitals or nursing homes.

New Hampshire for Fair Drug Prices

New Hampshire for Health Care supports fair drug pricing proposals that build on the Maine approach or addresses the issue at the federal level.

The following is a summary of how to bring down prices:

1. Pass patent law reform that supports research needs while allowing a fair process for generic drugs to come to market.
2. Mandate that drug companies in New Hampshire disclose the amount of funds spent for advertising, gifts to doctors, and other non-research related activity that is driving up costs.
3. Give New Hampshire the same power to negotiate with drug companies for fair prices that the federal government has for negotiating drug prices in Medicaid.

1  Henry J. Kaiser Family Foundation and Sonderegger Research Center, "Prescription Drug Trends: A Chartbook - Update", Nov. 2001.
2  Alliance for Health Reform. "Health Costs and Health Coverage." August 2002.
3  Sager, Alan and Deborah Socolar, "A Prescription Drug Peace Treaty," Oct. 2000.
4  U.S. Action, "Impossible Choices," Oct. 2000.
5  Sager.
6  Ibid.