Advocates: States should buy bulk prescriptions

BOSTON – Massachusetts and other states looking to curb the skyrocketing cost of prescriptions should band together and purchase drugs in bulk, advocates told a congressional panel Monday.

Creating such a consortium would help bring down the cost of prescriptions for Medicare recipients, many of whom are elderly, but could also limit which drugs would be covered.

“We’re bankrupting many individuals, including many senior citizens, by the high cost of prescription drugs,” said U.S. Rep. John Tierney, D-Mass.

Drug companies oppose state-sponsored bulk purchasing programs, saying they would quash innovation.

Such a program is already in place at Veterans Affairs, which has created lists of drugs that doctors can prescribe for specific ailments, officials told the Subcommittee on National Security, Veterans Affairs and International Relations. Tierney, a subcommittee member, hosted the hearing in Boston.

The program has driven down the cost of prescriptions by favoring less-expensive generic drugs and forcing drug companies, which offer similar drugs to bid against each other.

Expanding that program to Medicare could drive down drug costs even more, according to John Ogden, director of pharmacy benefits for the Department of Veterans Affairs. About 30 percent of Medicare recipients have no prescription drug coverage.

“The size of the Medicare program has the potential to create far better [savings],” he said. “Medicare is huge.”

Setting up such a program isn’t as easy as it sounds.

Convincing patients to accept generic and less expensive drugs is getting tougher as drug companies pour millions into television ads touting the latest pills, critics said.

Drug companies argue the high price of brand-name drugs pays for the development of other drugs.

The companies also know advertising works, according to Judith Waxman of Families USA, a consumer advocacy group.

In 2001, nine publicly traded U.S. drug companies spent a combined total of $45 billion on marketing, advertising and administration and only $19 billion on research, Waxman said.

“Direct-to-consumer advertising plays a major role in increasing the demand for many high-priced drugs, sometimes steering consumers to higher-priced drugs when a lower-cost alternative may be equally appropriate,” Waxman said.

Those numbers are deceptive because they include important administrative costs, according to Jeff Trewhitt, spokesman for PhRMA, the Pharmaceutical Research and Manufacturers of America.

The industry spends just $2.7 billion on direct consumer advertising compared to $30 billion on total research, he said. That research spending is key to the industry’s vitality, he said.

“The U.S. pharmaceutical industry is far and away the most innovative pharmaceutical industry in the world,” he said.

Trewhitt also rejected the idea of state-organized bulk purchasing programs, saying they would “stifle” the industry.

A bulk drug purchasing program would help seniors forced to choose between food, rent and medicine, according to Phil Mamber, president of the Massachusetts Senior Action Council.

The 72-year-old Bridgewater resident has helped organize bus trips to Canada to allow seniors to take advantage of lower drug prices there.

“The cost of prescription drugs are going through the roof. It’s a terrible burden,” he said.

Bulk drug purchasing at the VA and Department of Defense has been successful in reining in costs, said Cynthia Bascetta, who oversees veterans’ health care issues for the U.S. General Accounting Office.

The agencies exert “considerable leverage when they buy increased volumes of particular generic or therapeutically equivalent brand name drugs that are interchangeable in efficacy, safety and outcomes,” Bascetta said.