News Release
Lawmakers to Tackle High Cost of Prescriptions Again
For Immediate Release: Contact: Sen. Dede Feldman.
Friday Oct. 19,2001 Vice Chair, Health and Human Services Committee
242-1997 or 220-5958
The Health and Human Services Committee will hold hearings on prescription
drug prices on Wednesday Oct. 24, with testimony scheduled from seniors,
health providers, pharmacists, drug industry representatives and a nationally-known
expert on prescription drug pricing, Dr. Steven Schondelmeyer. The committee
hearing will be held in Room 322 of the State Capitol Building, beginning
at 8:00 a.m.
Last year, the committee, with bi-partisan backing, proposed a package
of eight prescription drug reform measures to bring down the prices of
prescriptions to seniors and others without prescription drug coverage
here. Three of the major bills cleared the legislature but were vetoed
by the Governor.
Approximately 80,000 New Mexico seniors do not have prescription drug
coverage, and most of these are charged the highest price in a complicated,
tiered pricing structure utilized by the pharmaceutical industry.
"Last year, we heard from sick seniors who were not filling their
prescriptions, traveling to Mexico where prices were less than half, or
selling their possession to afford the lifesaving drugs," says Sen.
Dede Feldman, vice chair of the committee.
Dr. Steven Schondelmeyer, head of the Department of Pharmaceutical and
Health Systems at the University of Minnesota and the director of the
PRIME Institute will update the committee on other state efforts to control
prescription drug prices (now growing three times as fast as other medical
expenses), federal proposals and legal actions taken in response.
"The difference between prescription drugs and most other products
is that because they are essential to life, they are subject to universal
demand. Yet the companies often operate from a monopoly position, "Schondelmeyer
told seniors this summer at the NM State Agency on the Aging’s Glorietta
conference.
Schondelmeyer said that the final price of any prescription drug is based
on a number of factors including the cost of research and development
(21%), the cost of production (20%), advertising (30%) and profit (18.3%).
Net profits for pharmaceutical companies in 1999-2000 were 18.3%, whereas
the average Fortune 500 company’s profit was at the 4.5% level he
said. "And community pharmacies are operating on a 2-3% profit margin,
he added.
Pharmaceutical company representatives say the high prices and profits
are necessary to fund research and encourage innovation
"But the value of innovation is only realized when a person has
access and properly uses a medication," says Schondelmeyer.
"Access to prescription drugs and health care overall is a problem
in New Mexico, " says Feldman "with 500,000 people lacking health
care insurance, and shortages of health care providers in rural areas."
To provide better access to the high priced medicines, Schondelmeyer
says that states need to provide a partial subsidy for low income seniors
and others, catastrophic coverage and reasonable drug prices for all,
whether they are covered by insurance or not.
For advance interviews with Dr. Schondelmeyer, call 612-624-9931.
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