Drug Companies Put the Squeeze on Older Americans

Seniors' Most Popular Drugs Increase in Cost Four Times the Rate of Inflation

Every year for the last five years, the prices of the 50 drugs most used by older Americans have increased faster than the rate of inflation, with increases in 1998, on average, four times the rate of inflation, according to a newreport by the consumer watchdog group Families USA. From January 1998 to January 1999 the rate of inflation increased 1.6 percent and the prices of the 50 most prescribed drugs for older Americans increased 6.6 percent.

Chart: Price Increase of Top 10 Drugs Used by Seniors vs. Inflation

"While the pharmaceutical industry continues to be the most profitable industry in America, it keeps drastically raising the prices of the drugs most commonly used by seniors," said Ron Pollack, executive director of Families USA. "Pharmaceutical companies are raising drug prices on the backs of America's seniors and these vital medicines are increasingly unaffordable for older Americans."

Chart: Drug Company Profits Higher than Fortune 500

Among the drugs examined in the new report by Families USA, Hard To Swallow: Rising Drug Prices for America's Seniors:

• Lorazepam, used to treat Parkinson's disease, cost $97 for a year's supply in 1994, now costs $469 per year. The cost increased by 279 percent from January 1998 to January 1999 (179 times the rate of inflation) and by over 385 percent in the last five years (30 times the rate of inflation).
• Imdur, used to treat angina and the seventh most prescribed drug for seniors, increased in price ten times over the last five years, going from $237 per year in 1994 to $525 per year in 1999. It increased in cost by more than 111 percent over the last five years (almost nine times the rate of inflation).
• Lanoxin, used to treat congestive heart disease and the most prescribed drug for seniors, increased in price by over 87 percent in the last five years (almost 7 times the rate of inflation), increasing 15 percent from 1998-1999 alone (almost ten times the rate of inflation).
• Atrovent, used to treat respiratory illnesses, increased in price eight times and went from $382 per year in 1994 to $546 per year in 1999. From January 1994 to January 1999, the drug increased over 37 percent in price, almost three times the rate of inflation. In calendar year 1998 alone, the drug increased over 14 percent in price (nine times the rate of inflation).
• Propulsid, used to treat gastrointestinal problems, went from $876 per year in 1994 to $1,171 per year in 1999. From January 1994 to January 1999 the drug increased in cost almost 30 percent, over two times the rate of inflation. Propulsid increased in cost by nine percent from 1998-1999 alone, almost six times the rate of inflation.

Chart: Costs of the Most Popular Drugs Used by Seniors Increasing Faster Than the Rate of Inflation

While older Americans fill over 18 prescriptions per year, and nearly half of all Medicare beneficiaries live on less than $15,000 per year, the elderly are the last major insured consumer group without access to prescription drugs as a standard benefit.

"It is unconscionable that the sickest and oldest Americans go without prescription drug coverage as part of their basic benefit package," added Pollack. "Each year their social security checks increase only at the rate of inflation, while the costs of the drugs they take rise at two, three or four times the rate of inflation."

The report found that, in the last year, among the 50 most prescribed drugs for seniors :

• forty-two of the 50 drugs increased in price faster than the rate of inflation (tables 1 & 2);
• more than two-thirds (36 out of 50) rose two or more times faster than the rate of inflation;
• nearly half (23 out of 50) rose at more than three times the rate of inflation; and
• one-third (17 out of 50) rose at more than four times the rate of inflation.

While the median profit for all Fortune 500 companies was 4.4 percent in 1998, for the manufacturers of the 50 most prescribed drugs for seniors their median profits were almost five times higher at 20 percent (table 3). Astra, Pfizer, Schering, Eli Lilly and Merck, which manufacture 19 of the 50 most prescribed drugs for seniors, enjoyed profits at or above 20 percent in 1998.

"Seniors can't take advantage of the many discounts in the marketplace for prescription drugs," added Pollack. "HMOs and other institutional purchasers get sharp discounts on prescription drug prices, but for most seniors who don't have a prescription plan or have a very expensive one, they can't reap the reward of these benefits and have to pay full, not discounted, prices for drugs."

The price increase data in the report are based on price increases in average wholesale prices. Data for the report were prepared for Families USA by the PRIME Institute of the University of Minnesota.

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Families USA is the national organization for health care consumers. It is nonprofit and nonpartisan and advocates for high-quality, affordable health care for all Americans.

1201 New York Avenue NW, Suite 1100 · Washington, DC 20005
202-628-3030 · Email: info@familiesusa.org · www.familiesusa.org