FYI

[Guest guest]

Date: JanuaryÊ9,Ê2007 Contact: Dave Lemmon, Director of Communications

Geraldine Henrich-Koenis, Deputy Director of Communications

Meissner, Press Secretary

New Report Shows Medicare Drug Plan Prices Are 58 Percent Higher than VA Prices

Report Issued as House of Representatives Is Scheduled to Vote Soon to End

Prohibition

Preventing Medicare from Bargaining for Lower Drug Prices

Washington, D.C. Ð Medicare drug plan prices for the top drugs prescribed to

seniors are

58 percent higher than the same drugs provided to veterans by the Department of

Veterans Affairs (VA), according to a report released today.

The new report, issued by the consumer health organization Families USA, was

released

shortly before the House of Representatives was scheduled to vote on a bill to

end the

current prohibition preventing Medicare from bargaining for cheaper drug prices.

The bill

is a top priority for House Speaker Pelosi and her new Democratic

majority.

For the top 20 drugs prescribed to seniors, the report examined prices charged

by the VA

compared to the prices charged by the five companies with the largest enrollment

in the

Medicare (Part D) drug program. Those companies, UnitedHealthcare/PacifiCare,

Humana,

Wellpoint, Member Health, and WellCare, enrolled almost two-thirds (65 percent)

of the

Medicare beneficiaries participating in Part D during 2006.

According to the report, the prices charged by plans sponsored by the five

companies are

50-75 percent higher than the VA price for Celebrex; 51-82 percent higher for

Lipitor (10

mg); 69-95 percent higher for Nexium; 205-261 percent higher for Fosamax;

435-522

percent higher for Protonix; and 1,066-1,229 percent higher for Zocor (20 mg).

ÒThese high prices devastate seniors who need to take multiple medicines,

especially when

they reach the coverage gap known as the Ôdoughnut hole,ÕÓ said Ron Pollack,

Executive

Director of Families USA. ÒThey are also a rip-off of American taxpayers, who

pay for

three-quarters of the costs of Medicare Part D.Ó

For all of the top 20 drugs prescribed to seniors, VA prices were substantially

lower than

the lowest prices charged by the Part D insurers, according to the report. The

median price

difference was 58 percent. In other words, for half of the 20 drugs, the lowest

price

charged by the Part D insurers was at least 58 percent higher.

According to the report, the difference between the lowest VA price and lowest

price of

any of the Part D plans offered by the five largest companies is enormous,

including:

For Protonix, a gastrointestinal agent, the VA price was $214.52, and the lowest

Part D

plan price was $1,148.40Ña $933.88 difference, or 435 percent.

For Fosamax, an osteoporosis treatment, the VA price was $250.32, and the lowest

Part D

plan price was $763.56Ña difference of $513.24, or 205 percent.

For Toprol XL (100 mg), a beta blocker, the VA price was $250.06, and the lowest

Part D

plan price was $395.52Ña difference of $145.46, or 58 percent.

For Celebrex, an anti-inflammatory drug, the VA price was $632.09, and the

lowest Part D

plan price was $946.44Ña difference of $314.35, or 50 percent.

For Zocor (20 mg), a lipid-lowering agent, the VA price for a yearÕs treatment

was

$127.44, while the lowest Part D plan price was $1,485.96Ña difference of

$1,358.52, or

1,066 percent.

Although a generic version of Zocor (simvastatin) became available in June 2006,

the

lowest price offered by the top Part D insurers for Zocor's generic equivalent

is still 706

percent higher than the lowest VA price for brand-name Zocor.

ÒOpponents of Medicare bargaining make two contradictory claims. First, they

claim that

private market competition under Part D is more effective in reducing prices

than Medicare

bargaining; and second, they claim that Medicare bargaining would reduce prices

so

significantly it would harm research and development,Ó said Pollack. ÒThese

arguments

cannot both be trueÑand, indeed, neither is true.Ó

Using numbers the major drug companies have publicly submitted to the Securities

and

Exchange Commission (SEC), the Families USA report rebuts the assertion that

Medicare

bargaining would harm research and development (R & D). According to the report,

the

largest U.S.-based drug companies spent more than twice as much on marketing,

advertising, and administration as they spent on R & D (13.9 percent versus 32.0

percent of

revenues), and they retained more in profits than they spent on R & D (17.4

percent versus

13.9 percent).

In 2005, for example, Pfizer spent 2.3 times as much on marketing, advertising,

and

administration as on R & D (33.1 percent versus 14.5 percent of revenues).

Merck spent 1.9 times as much on marketing, advertising, and administration as

on R & D

(32.5 percent versus 17.5 percent of revenues).

Abbott Laboratories spent 3.0 times as much on marketing, advertising, and

administration as on R & D (24.6 versus 8.2 percent of revenues).

The Families USA reportÕs pricing data were for November 2006 as reported by

Part D

plans to the Centers for Medicare and Medicaid Services (CMS), as listed on the

CMS Web

site (<http://www.medicare.gov/>www.medicare.gov). VA pricing information was

obtained from the VAÕs price schedules.

###

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 á Washington, DC 20005

á E-mail: info@... á <http://www.familiesusa.org/

>www.familiesusa.org