Holly Bailey: Bitter Pills: The Battle Over Perscription Prices

[James Love <love@cptech.org>]

CENTER FOR RESPONSIVE POLITICS
MONEY IN POLITICS ALERT
Vol. 5, #17     May 17, 1999
tel: 202-857-0044, fax: 202-857-7809
email: info@crp.org, web: www.opensecrets.org

Bitter Pills: The Battle Over Prescription Drug Prices

By Holly Bailey

The rising cost of prescription drugs in American health care has set the
stage for a showdown in Washington over whether the federal government
should help make medicine more affordable for the nation's elderly by
including such costs in Medicare coverage. The issue, which has suddenly
emerged as major topic on Capitol Hill, has proven to be among the more
divisive debates facing lawmakers these days. Congressional Democrats,
eager to attract the senior citizen vote into their corner for the 2000
elections, have introduced dozens of proposals to extend prescription drug
benefits to the elderly, the group that needs medicines the most. Such
proposals, however, have drawn the ire of Republicans and the
pharmaceuticals industry, which has launched a massive counterattack
against efforts to expand benefits. Drug companies - which spent over $111
million lobbying Congress and federal agencies between January 1997 and
June 1998 - say they share the goal of ensuring senior citizens receive
the medicines they need. However, the industry opposes government price
controls, which could curb company revenues. Republicans, meanwhile,
contend expanding Medicare is not the answer, as lawmakers from both
parties already are mired in disputes over how to solve the program's
long-term financial problems. 

Drug companies have specifically targeted bills that address pricing
issues, as any proposal that seeks to give discounts to the elderly -- the
industry's biggest customers -- could mean billions of dollars in revenue
losses. The pharmaceutical industry has instead supported legislation that
would require HMOs and private insurers to increase prescription drug
coverage and lower premiums for elderly patients. But with both parties
promising some sort of action on the issue, the drug industry is readying
itself for a lengthy and contentious war. Long one of the most powerful
lobbies on Capitol Hill, the pharmaceuticals industry spent nearly $12
million in soft money, PAC, and individual donations during the 1997-98
elections - a 53 percent increase over donations during the last mid-term
elections. Republicans, the chief allies of drug companies in the battle
over prescription drug prices, received 67 percent of contributions.

More than one-third of the 39 million people enrolled in Medicare 
have no coverage for the prescription drugs they use outside hospitals, 
according to a report commissioned for a congressional panel studying 
ways to save the federal program. Since its creation in 1965, Medicare 
has covered only the drugs given to patients in hospitals or other 
medical facilities. Many elderly people, as a result, have turned 
to private insurance companies or health maintenance organizations 
to supplement such costs. However, such help is drying up, as some 
insurance companies and HMOs recently have imposed yearly limits on 
prescription drugs because of the soaring costs of pharmaceuticals. 
Prescription drug costs rose by 14 percent in 1997, compared with 
only 5 percent for overall health services. As a result, Medicare 
patients who foot the entire bill for their prescription medicines 
increasingly are feeling the financial pinch.

Hoping to close a conspicuous gap in Medicare coverage, Democrats have
taken the lead in trying to secure prescription drug benefits for the
elderly. More than a dozen different pieces of legislation attempt to
tackle the problem, with almost all promoting an expansion of Medicare
benefits. A leading proposal, sponsored by Sen. Edward Kennedy (D-Mass.),
calls for patients to pay a tax-deductible $200 per year in drug expenses
while Medicare would pay 80 percent of the cost of each prescription. The
proposal - which would be funded through budget surpluses or money from
estate taxes -- also calls for the government to pay $1,200 of the first
$1,700 in annual drug expenses. Other proposals, meanwhile, call for
pharmaceutical companies to sell their drugs at lower prices to senior
citizens. The costs for the elderly, according to the legislation, would
be rolled back to match the same pricing scale offered to federal
government agencies - like the Department of Defense - and insurance
companies, which often receive substantial discounts because they are
favored and frequent customers.


Top 10 Soft Money, PAC, & Individual 
Pharmaceutical Company Campaign Contributors, 1997-98*

Company    
Amount    Dems    Repubs
1997 Lobby    1998 Lobby

1. Pfizer Inc   
$1,103,180   $210,850   $892,330
$10,000,000   $8,000,000

2.Bristol-Myers Squibb   
$827,324   $216,650   $610,674
$3,780,000   $2,820,579

3. Eli Lilly & Co
$712,173   $205,824   $505,849
$3,836,442   $5,160,000

4. Glaxo Wellcome Inc
$687,751   $146,825   $539,726
$3,774,000   $3,120,000

5.Novartis Corp
$638,592   $179,250   $459,342
$1,560,000   $1,160,000

6. Schering-Plough Corp
$486,919   $109,362   $377,557
$2,682,508   $4,268,000

7. Rhone-Poulenc Inc
$467,575   $169,500   $298,075
$1,640,000   $1,220,000

8.Merck & Co
$351,228   $93,496   $257,732
$5,140,000   $5,000,000

9. Abbott Laboratories
$312,971   $56,672   $256,049
$893,300   $1,743,785

10. American Home Products
$301,225   $75,439   $225,261
$2,500,000   $2,210,000

Top 10 Senate Recipients of Pharmaceutical 
PAC and Individual Donations, 1997-98*

Name   Total

1. Orrin G. Hatch (R-Utah)
$191,037
2. Arlen Specter (R-Pa)
$186,580
3. Bill Frist (R-Tenn)
$166,366
4. Frank R. Lautenberg (D-NJ)
$130,322
5. Christopher J Dodd (D-Conn)
$120,300
6. Rick Santorum (R-Pa)
$112,120
7. Richard G. Lugar (R-Ind)
$102,150
8. Robert G. Torricelli (D-NJ)
$99,700
9. Kay Bailey Hutchison (R-Texas)
$92,734
10. Tom Harkin (D-Iowa)
$90,250


Top 10 House Recipients of Pharmaceutical PAC 
and Individual Donations, 1997-98*

Name   Total

1. Nancy L. Johnson (R-Conn)
$64,500
2. Bill Thomas (R-Calif)
$47,100
3. Joe L. Barton (R-Texas)
$46,150
4. Richard A. Gephardt (D-Mo)
$44,000
5. Thomas J. Bliley Jr. (R-Va)
$41,250
6. David M. McIntosh (R-Ind)
$38,000
7. John D. Dingell (D-Mich)
$34,000
8. Fred Upton (R-Mich)
$31,025
9. John R. Kasich (R-Ohio)
$30,752
10. Michael Bilirakis (R-Fla)
$30,062

*Contributions based on data downloaded from the FEC on 4/1/99. Totals 
include contributions from subsidiaries. Lobbying data based on documents 
filed with the Secretary of the Senate's office, 5/11/99.





-------------------------------
James Love 
Center for Study of Responsive Law | Consumer Project on Technology 
P.O. Box 19367, Washington, DC 20036 | http://www.cptech.org
Voice 202/387-8030 | Fax 202/234-5176 | love@cptech.org