HR 664/ S 731
With this legislation, 69 million Medicare beneficiaries would be allowed to buy prescription drugs at up to 40 percent off the current retail prices. This bill would end price discrimination practiced by prescription drug makers towards senior citizens and disabled persons on Medicare who now have no adequate prescription drug insurance coverage.
The Prescription Drug Fairness Act requires drug companies give seniors and other Medicare beneficiaries the same price discounts they give to large HMO type customers; it does not tell pharmaceutical companies what prices they can charge.
H R 664/ S 731 does not cripple pharmaceutical research and development (R&D).
US taxpayers have funded basic research and clinical research
with $27.4 billion in income tax credits, including the research and experimentation
credit from 1990-1996.
Drug companies’ spending on direct-to-consumer advertising increased by
43% for the first half of the year compared to the same period in 1998 —
three times faster than the 14% by which the Pharmaceutical Manufacturer’s
Association projected US firms’ R&D spending would grow.
The pharmaceutical industry is the most profitable business in the U.S. in terms of profit margin. The prevention of price gouging of seniors does not reduce research. The industry makes $26.2 billion in profits. It spends $11 billion annually on advertising and marketing.
H R 664/ S 731 would have minimal effect on the pharmaceutical industry’s bottom line. It would reduce drug industry sales revenue by just 3.3% because volume increases would offset most of the impact of lower prices.
H R 664/ S 731 is a major step in the right direction, but it
does not solve the whole problem, which is the elderly need to have health insurance
coverage for medicines.