Pharmaceuticals are a central
part of the American health care
system. New medications are
greatly
improving
health
outcomes and the overall quality
of life, and many are replacing
or enhancing surgery and other
invasive treatments. Others
prevent chronic conditions from
worsening
and
causing
significant disability. During the
last decade alone, the Food and
Drug Administration (FDA) has
approved more than 300 new
prescription drugs. Among these
are breakthrough treatments for
life-threatening conditions such
as heart disease, diabetes,
HIV/AIDS,
cancer,
cystic
fibrosis and sickle cell anemia.1
6
CHAPTER 6
KEYFACTS
In 2002, spending on prescription drugs reached $162.4 billion, or 10.5
percent of total health spending.a
Prescription Drugs
PRESCRIPTION DRUGS
Between 1982 and 2002, drug prices rose at an average annual rate of
1.75 percentage points over the rate of medical inflation. Between 2002
and 2003, projected U.S. spending on drugs at the retail level rose by 13.4
percent, compared to a rise of 6.5 percent in hospital spending.b
Between 40 and 60 percent of all employer costs for retirees 65 and older
can be attributed to prescription drugs.c The Medicare legislation enacted
in 2003 will help employers reduce their retiree drug costs by providing
tax-free subsidies amounting to an estimated $71 billion over ten years.d
Global spending on health care research and development (R&D), much
of which is for pharmaceuticals and related science and technology, is
estimated to exceed $100 billion in 2004.e
The time it takes the Food and Drug Administration to review an
application for a new drug has dropped from an average of 30 months in
1983 to 13 months in 2002.f
Reforms made in 2003 to a 1984 pharmaceutical patent law popularly
known as the Hatch-Waxman Act prohibit brand name drug manufacturers
from filing additional subsidiary drug patents that are based on
packaging, metabolites, and intermediate forms of a drug.g
Thirty-nine states have established or authorized programs providing
Yet prescription drugs are sometimes
pharmaceutical assistance in the form of subsidized coverage or price
controversial, mostly because of their
discounts to seniors and individuals with disabilities.h (See chart, "State
cost. In recent years, the growth rate in
Pharmacy Assistance Programs.")
retail prescription drug expenditures has
outpaced that in almost all other health
For key fact sources, see endnotes.
care sectors. During the 1990s, spending
on prescription drugs frequently
registered double-digit annual cost growth rates — a trend that is expected to continue.2
Dramatic developments in prescription drug coverage are also occurring on the policy front. After years of debate,
Congress narrowly passed the Medicare Prescription Drug, Improvement, and Modernization Act (MMA), which
President Bush signed into law in December 2003. In 2004, more than 7 million beneficiaries are expected to sign
up for Medicare's new prescription drug discount card program, which includes annual subsidies of $600 for
beneficiaries with annual incomes up to 135 percent of the federal poverty level (amounting to $12,372 for an
individual in 2004). In 2006, millions more will enroll for coverage in the Medicare drug benefit program. (For an
overview of the MMA, see Chapter 5, Medicare.)
Other government health programs already have prescription drug coverage for their beneficiaries. These include
Medicaid, various health programs administered by the Department of Defense and the Department of Veterans
Affairs, and the health programs of the Office of Personnel Management, which manages health plans for civilian
federal employees.
Prescription drug coverage is also included in health plans offered to state government employees, union members
ALLIANCE FOR HEALTH REFORM
For updates, go to www.allhealth.org
51
Prescription Drugs
CHAPTER 6
and millions of people working for private companies.
The generosity of drug coverage varies substantially in
state-administered Medicaid programs and among the
plans that are offered to federal workers. Nowhere is the
variation greater than in the private health insurance
sector, where insurance companies are increasingly
hiring pharmacy benefit managers (PBMs) to
administer their drug plans. Employees may also hire
PBMs directly.
6
A decade ago, PBMs focused primarily on filling
prescriptions and distributing medications. In the
process, they built sophisticated plants that could handle
mail-order business as well as distribution through other
channels, such as chain drug stores. Today PBMs not
only distribute medications, they also decide with
insurers and employers what the co-payments will be
and what drugs will be included on the list of approved
drugs, known as a formulary, and offered to health plan
enrollees.
PBMs also play a key role in negotiating the price of
drugs. Among other tools, they obtain rebates or
discounts on certain medications from drug
manufacturers, which are typically shared between the
PBM and the insurer or employer. According to a report
prepared for the Pharmaceutical Care Management
Association, PBMs currently manage almost 80 percent
of expenditures on prescription drugs in the U.S.3
PHARMACEUTICAL HOT BUTTON:
COSTS
A common theme runs through discussions of public
and private drug coverage: steadily rising costs.
According to IMS Health, a leading international
consulting firm that monitors the drug industry,
pharmaceutical spending was slated to rise by 11
percent in the U.S. and Canada in 2003, representing
almost half of all global sales.4 Another U.S.-only
estimate published in January 2004 projected that drug
spending would rise by 13.4 percent in 2003, as
compared to a 10.4 percent increase in spending for
private insurance premiums, and a 6.5 percent rise in
hospital spending.5
Between 1982 and 2002, drug spending grew faster than
overall health spending, due to increased use and
because pharmaceutical inflation exceeded medical
52
For updates, go to www.allhealth.org
SOURCEBOOK FOR JOURNALISTS, 2004
inflation by an average annual rate of 1.75 percentage
points.6 As a result, total drug spending more than
tripled between 1990 and 2001.7 By 2002, expenditures
had reached $162.4 billion, or 10.5 percent of total
health spending. The forecast by leading economists is
that pharmaceutical spending will reach 14.5 percent of
health care spending by 2012 — before growth from the
Medicare Modernization Act (MMA) is taken into
account.8
A number of factors have contributed to this growth.
One is the aging of the population. Those age 65 and
older filled almost four times as many prescriptions in
2000 as those under 65 (25.5 vs. 7.1).9 Other reasons
include expanded use of maintenance drugs, rising sales
of costlier drugs approved by the FDA during the
1990's, and stepped-up marketing efforts that include
direct-to-consumer advertising. Some critics point to
pharmaceutical companies' efforts to extend patent
protection for their drugs, and thus exclusive marketing
rights, by patenting drugs that provide little clinical
improvement over other available drugs — so-called
"me-too" drugs.10
In addition, consumers in managed care plans have,
until fairly recently, had access to prescription drugs at
low costs. Plans have tried to control drug costs by
introducing tiered pricing arrangements, under which
enrollees are charged more for drugs that are not
designated by their health plan as preferred.
The role of direct-to-consumer (DTC) advertising in
driving drug sales has been the subject of much debate.
A recent study concluded that DTC advertising
accounted for 12 percent, or $2.6 billion, of total growth
in drug spending during 2000.11
For consumers who have insurance, the impact of years
of steadily rising drug costs is now becoming evident in
the form of increased copayments imposed by
employers and insurers. Formularies (lists of health
plans' approved drugs) have become more restrictive,
and are generally accompanied by multi-tiered pricing
arrangements, described above.
For many consumers without health insurance, nondiscounted prices for drugs are often simply
unaffordable.
Looking ahead, pharmaceutical spending is expected to
ALLIANCE FOR HEALTH REFORM
SOURCEBOOK FOR JOURNALISTS, 2004
CHAPTER 6
60
Number of NMEs
25
40
20
30
15
20
10
10
5
1993
1994
1995
1996
1997
# OF NMEs (new molecular entities)
1998
1999
2000
2001
2002
2003
Billions of dollars
30
50
0
Prescription Drugs
U.S. PHARMACEUTICAL RESEARCH AND DEVELOPMENT TRENDS,
1993 - 2003
35
6
0
TOTAL RESEARCH & DEVELOPMENT SPENDING
Note: Line relates to the right-hand Y-axis and models worldwide research and development (R&D) spending by PhRMA member companies.
Source: U.S. Food and Drug Administration, Center for Drug Evaluation and Research (1997 & 2002). “Report to the Nation.” Number of NMEs represent
sum of Standard and Priority Approvals. (http://www.fda.gov/cder/reports/rptntn97.pdf; http://www.fda.gov/cder/reports/rtn/2002/Rtn2002.PDF).
Pharmaceutical Research and Manufacturers of America (2004). “Pharmaceutical Industry Profile 2004.”
(http://www.phrma.org/publications/publications//2004-03-31.937.pdf)
consistently outstrip the growth in gross domestic
product. Such projections worry many private
companies, which are concerned about maintaining
prescription drug coverage for current workers and
retirees. Surveys have found that 40 to 60 percent of
employer costs for retirees 65 and older are attributable
to prescription drugs. 12
In response, the new Medicare law includes a provision
intended to subsidize prescription costs for those
employers that offer their retirees health plans with drug
coverage — if that coverage is at least as generous as
what Medicare will provide. Specifically, the law
provides for direct tax-free subsidies set at 28 percent of
a retiree's drug costs, not counting the initial $250
deductible, up to $5,000 annually.13 This means the
dollar amount that corresponds to the 28 percent in drug
spending will not be counted as income for the retiree,
and will be fully tax-deductible to the employer.
The Congressional Budget Office (CBO) estimated that
employer subsidies from 2004-2013 would cost the
federal budget $71 billion.14 Already, 18 leading U.S.
ALLIANCE FOR HEALTH REFORM
companies have reported projected savings totaling
$11.8 billion in retiree benefit costs in their 2003
financial reports.15
Large employers report that in the near future, they
expect to begin using more stringent cost containment
strategies to control drug costs for their retirees and for
their younger workers. These strategies include
requirements for providers to obtain prior authorization
before prescribing certain medications and to use
"therapeutic interchange" (drug substitution) programs
that explicitly factor pharmaceutical costs into medical
decision-making.
Only about 1 percent of large companies offered their
retirees discount drug cards in 2003,16 even though
pharmacy-sponsored discount cards and cards
sponsored by pharmaceutical companies are becoming
more common. In the future, the role of Medicare
supplemental insurance in the pharmaceutical market
will diminish. The Medicare Modernization Act
prohibits insurers from selling new Medigap policies
with prescription drug coverage to beneficiaries
For updates, go to www.allhealth.org
53
Prescription Drugs
CHAPTER 6
enrolled in the new Part D program that starts in January
2006.17 In 2001, 7 percent of beneficiaries were enrolled
in Medigap drug plans.18
PHARMACEUTICAL R&D AND RECENT
CHANGES IN PATENT LAW
6
The research and development of new drugs — which
can receive 20 years or more of patent protection — is
a top priority for the pharmaceutical industry. During
2002-2003, the FDA approved 38 new drugs, or new
molecular entities (NMEs).19 The agency's average
review time has dropped substantially, from an average
of 30 months in 1983, to 13 months in 2002.20 Global
health care R&D spending, much of which is for
pharmaceuticals and related science and technology, is
estimated to exceed $100 billion in 2004.21
Looking ahead, many experts believe pharmaceutical
R&D spending will remain strong, fueled by major
advances in basic science and genomics that have
created expanded research opportunities for drug
discovery. (See chart, "U.S. Pharmaceutical R&D
Trends, 1993-2002.") Profits remain high, with the U.S.
pharmaceutical industry consistently ranked as the most
profitable industry.22
The Hatch-Waxman Act of 1984 is one of the
cornerstones of federal law affecting patent protections
for pharmaceutical products. The statute attempts to
balance the interests of brand name pharmaceutical
manufacturers seeking patent protection, and the
interests of generic companies that bring lower-cost
products to the market once that protection expires.
Major provisions of Hatch-Waxman include: a
requirement for public disclosure of information on the
patents for brand-name drugs; a process for
compensating brand-name patent holders for substantial
delays in FDA approval; a provision allowing the FDA
to assign exclusive marketing rights to a generic firm
for up to six months; legal protections that enable
generic companies to conduct research on potential
products during the life of the patent; and standardized
mechanisms for bringing patent challenges in court.23
While the 1984 law did much to clarify rules for drug
patent holders and generic companies, continuing
litigation and antitrust complaints filed with the Federal
Trade Commission recently prompted Congress and the
54
For updates, go to www.allhealth.org
SOURCEBOOK FOR JOURNALISTS, 2004
FDA to undertake additional reforms. The net effect of
the regulatory and statutory changes made in 2003 is
that brand name companies can no longer file so-called
subsidiary patents that are based on packaging,
metabolites, and intermediate forms of a drug. In
addition, FDA now has the authority to reassign
marketing exclusivity if a generic company fails to
begin marketing within a certain time period, or does
not receive FDA approval for its product.24
STATES AIM TO EXPAND ACCESS,
MODERATE DRUG SPENDING,
PERHAPS TRY REIMPORTATION
The recently enacted Medicare law will shape state
decisions on prescription drug coverage over the next
decade. Although CBO projects that federal Medicaid
spending will drop by $142 billion over the 10-year
period from 2004-2013, as Medicare picks up the tab,
states will continue to feel fiscal pressure from
prescription drug spending for Medicaid beneficiaries,
and for individuals dually entitled to Medicare and
Medicaid (dual eligibles).
The drop in federal Medicaid spending is projected to
occur primarily because prescription drug coverage for
dual eligibles will shift from Medicaid to Medicare. But
states will continue spending almost as much on
Medicaid as they would have before the new law. This
is because the federal government will require states to
offset most of the additional Medicare drug costs the
federal government will assume for dual eligibles. This
provision in the new Medicare law, called the
"clawback," is more fully described in Chapter 7,
Medicaid, where there is also more information on how
Medicaid's financing system works.
Currently, states are using a variety of strategies to try to
moderate growth in Medicaid drug costs, including the
use of preferred drug lists or formularies, substitution of
generic drugs for brand-name products, increases in
deductibles and copays, imposition of prior
authorization requirements for providers, development
of drug utilization review programs, and negotiation of
supplemental rebates with drug manufacturers.25 States
are likely to use these and other cost-containment
mechanisms in the future, as they seek to reduce drug
costs from state employee health plans and various
state-run drug assistance programs.
ALLIANCE FOR HEALTH REFORM
SOURCEBOOK FOR JOURNALISTS, 2004
CHAPTER 6
Prescription Drugs
STATE PHARMACY ASSISTANCE PROGRAMS
AK
NH
VT
WA
MT
ND
ID
MA
NY
WI*
SD
CA
PA
IA
NE
UT
IL*
CO
RI
CT
MI
WY
NV
ME
MN
OR
KS
6
IN*
MO
OH
WV VA
KY
NJ
DE
MD*
DC
NC
TN
AZ
OK
NM
SC*
AR
MS
TX
AL
GA
LA
HI
FL*
States with enacted pharmacy assistance programs (eligibility varies; may include disabled, others)
States with enacted pharmacy assistance programs but currently not operational
* FL, IL, IN, MD, SC, WI include approved “Pharmacy Plus” waivers
Note: Data as of August 16, 2004.
Source: National Conference of State Legislatures (2004). “State Pharmaceutical Assistance Programs.” August 16.
(www.ncsl.org/programs/health/drugaid.htm) Retrieved September 7, 2004.
According to the National Conference of State
Legislatures (NCSL), as of April 2004, 39 states had
established or authorized programs providing
pharmaceutical coverage or discounts to seniors and
individuals with disabilities. Thirty-one of those
programs provide participants with direct subsidies
using state funds, and some among this group also
sponsor discount programs. Other states operate only
discount programs.26 Much of the legislation creating
subsidy programs is fairly recent, and implementation
may be slowed by the need to develop ways to
coordinate the state's coverage with Medicare-approved
prescription drug discount cards, and then the Medicare
Part D benefit. (See chart, "State Pharmacy Assistance
Programs.")
Currently, state pharmacy assistance programs vary
significantly in the number of people served and in their
ALLIANCE FOR HEALTH REFORM
design. Many states have small programs. Two of the
largest programs are operated by New Jersey and
Pennsylvania. New Jersey's Pharmaceutical Assistance
for the Aged and Disabled (PADD) program is older,
established in 1975. In 2004, PADD will serve 227,500
seniors with incomes under $19,739. A second program,
the Senior Gold Prescription Discount Program
established in 2001, serves seniors with incomes up to
$29,739. In Pennsylvania, the state recently authorized
expansion of assistance to seniors with higher incomes.
The state's original 1984 program serves individuals
with incomes up to $14,500; legislation enacted in 2003
will provide subsidies to seniors enrolled in its newer
program, PACENET, with incomes up to $23,500.27
Another strategy is being employed by six states —
Florida, Indiana, Illinois, Maryland, South Carolina and
Wisconsin — which have received approval for Section
For updates, go to www.allhealth.org
55
Prescription Drugs
CHAPTER 6
SOURCEBOOK FOR JOURNALISTS, 2004
most often known as
reimportation.
In
its
simplest form, it describes
what a growing number of
individuals have been doing
for several years. Typically,
they travel to Canada or
13%
Mexico where it is possible
Industry ($45.9 Billion)
to buy prescription drugs —
6%
including many that were
NIH ($20.3 Billion)
70.5
manufactured in the United
62.1
States — at significantly
55.4
56%
Other Federal ($5 Billion)
lower prices. The practice of
25%
90.7
importation by entities other
81.7
74.7
Other ($10.4 Billion) *
than drug manufacturers
77.2
violates federal law. But it
has been, for the most part,
tolerated by Food and Drug
Administration authorities
Total estimated U.S. health research expenditures, 2001 = $81.7 Billion
under a "compassionate use"
* ‘Other’ includes universities’ own funds, private foundations, voluntary health associations, and
enforcement policy — if the
private research institutes’ own funds. Research spending figures include, but are not limited to,
drugs are imported by
pharmaceutical research.
Source: Research!America (2002) (www.researchamerica.org/publications/2001healthdollar.pdf)
individuals for their own use
and the quantities involved
are small. The FDA has
1115 federal waiver programs known as Pharmacy Plus.
indicated it will move aggressively to enforce the
These programs provide drug assistance through
federal prohibition on reimportation for commercial
Medicaid to individuals with incomes between 100
use. But states such as Illinois, Minnesota, Wisconsin,
percent and 200 percent of the federal poverty level.28
and New Hampshire are pushing FDA and Congress to
rescind the prohibition and establish a system to allow
Other states, including Maine, Vermont and Hawaii,
registered wholesalers and distributors to make lowerhave sought to extend assistance to low-income
priced drugs obtained from certain countries available
individuals through waiver programs that establish
in the U.S.
discount programs based on Medicaid's "best" price, but
court rulings have placed these programs in limbo.29
Moreover, some state and local governments are
encouraging their employees to consider filling their
Interest is also growing in the development of collective
prescriptions through Canadian sources. For example,
buying pools for prescription drugs. Following
in February 2004, the Internet site for the State of
extensive negotiations, in April 2004, the Department
Wisconsin began listing prescription medicine prices
of Health and Human Services (HHS) approved the first
from three Canadian online pharmacists, along with
multi-state purchasing pool for prescription drugs.
order forms. The service is nearly identical to one
Michigan, Vermont, New Hampshire, Alaska and
posted a month earlier by Minnesota. Illinois' proposed
Nevada are the five states in this pool. In 2004,
program has been expanded to include countries in the
Michigan expects to save $8 million in Medicaid costs,
European Union. Similar initiatives have appeared in
and Vermont is projecting savings of about $1 million,
Westchester County, N.Y., and Springfield, Mass.,
while Nevada projects savings of $1.9 million, Alaska
among others, for either municipal employees or the
30
$1 million, and New Hampshire $250,000.
public.31 However, these Internet sites generally do not
feature quotes for estimated savings that consumers can
The newest and most controversial idea that is being
expect to receive by purchasing their drugs from sites
supported by some states to hold down drug costs is
outside the U.S.
SOURCES OF FUNDING FOR UNITED STATES
HEALTH RESEARCH, 2001
6
56
For updates, go to www.allhealth.org
ALLIANCE FOR HEALTH REFORM
SOURCEBOOK FOR JOURNALISTS, 2004
The Bush Administration announced in February 2004
that it was launching a study of how prescription drugs
might be safely imported from Canada, which is
scheduled to be released by December 2004. The study
was required by the new Medicare drug law.34 (For
more information on the law, see Chapter 5, Medicare.)
Safety concerns about reimportation focus principally
on the risk that counterfeit and adulterated
pharmaceutical products not approved by FDA could
find their way into the U.S. market. There is also debate
about how much the American health care system
would save in drug costs if reimportation were
legalized. The Congressional Budget Office believes
that such savings would be minimal.35
CURRENT POLICY DEBATES AND
PROPOSALS
The 2004 presidential election is focusing some
attention on prescription drug coverage for Medicare
beneficiaries and affordable medications for all
consumers. The Bush administration argues that the
Medicare law should be given a chance to work, since it
makes the case that the new prescription drug benefit is
the greatest advance in the Medicare program since it
was enacted in 1965. On the other hand, the Kerry
campaign maintains that the new benefit provides
insufficient protection against rising pharmaceutical
prices for seniors and for taxpayers who fund the
program. The Kerry campaign lays out a six-point plan
to reduce drug costs, including allowing "reimportation
of safe, FDA-approved prescription drugs" from
Canada.36
Calls to amend the current federal position on
reimportation have become familiar in Washington. For
example, the chairman of the Senate Finance
Committee has proposed legislation that would disallow
a portion of the pharmaceutical industry's valuable
R&D tax credit — as well as the normal business
deduction for marketing, a category that includes directto-consumer ads — for companies found to be blocking
ALLIANCE FOR HEALTH REFORM
reimportation.37 (See chart, "Sources of Funding for
U.S. Health Research, 2001.") A series of Senate and
House hearings on safety issues associated with
reimportation from Canada and the European Union
have been held during the 108th Congress. AARP —
which campaigned in support of the Medicare
prescription drug law — is broadly supportive of
reimportation. FDA, however, is deeply skeptical, and
has pledged to vigorously oppose reimportation in a
lawsuit that was filed in August 2004 by Vermont,
which claims that the Medicare law requires the agency
to issue reimportation regulations. The pharmaceutical
industry also remains firmly opposed to reimportation.
6
Prescription Drugs
One recent survey found that the share of U.S. residents
saying they have bought prescription drugs from
Canada or another country — by going there, by mail or
on the Internet — rose from 5 percent in 2002 to 7
percent in 2003.32 IMS Health estimates that U.S.
residents reimported $1.1 billion (in U.S. dollars) in
drugs from Canada in 2003.33
CHAPTER 6
STORY IDEAS
Medicare Rx discount cards: How clear and useful
is CMS' web-based information on which cards in
your area offer the best deals for seniors? Are price
quotes correct in your local area? How much of a
discount are seniors in your area getting using a
Medicare-approved discount card? On which
drugs? What prices are the discounts based on?
How frequently do the prices and discounts change?
Which cards are most popular? What is the sign-up
rate for cards among seniors in your area? How
many are receiving a $600 subsidy? Are there seniors who are dissatisfied with their Medicare discount cards, and if so, what have they done about it?
Are there discount cards not sponsored by Medicare
that offer better prices?
Reimportation: What do state and local government
officials believe consumers need to know about purchasing drugs reimported from abroad? What do
physicians in your area think of reimporting prescription drugs? What are the relative advantages
and disadvantages of reimporting drugs from
Canada only, as compared to the European Union
and other industrialized nations? How does reimportation affect the prices and safety of consumer
products other than pharmaceuticals?
State collective buying pools: Are there any drug
purchasing pools in your state or region? How do
they work? Have drug prices declined, remained
flat, or risen as a result?
State prescription drug assistance programs: Is there
such a program in your state, and if so, how many
For updates, go to www.allhealth.org
57
Prescription Drugs
CHAPTER 6
individuals are enrolled, how is the program
financed, and what benefits are available? Is the
state program changing as a result of the Medicare
prescription drug discount program? How is the
state program likely to change when Medicare's
drug benefit takes effect in 2006?
6
Drug detailers: Pharmaceutical companies send representatives into physician offices to explain the
merits of their products, especially new products.
Have either health plans or your state Medicaid program tried to send "counter-detailers" to physician
offices, i.e., people who can explain the merits of
less expensive drugs or alternative therapies?
SOURCES AND WEBSITES
Analysts/Advocates
Stuart Altman, Sol C. Chaikin Professor of National
Health Policy, Brandeis University Institute for Health
Policy, 781/736-3803
Joseph Antos, Wilson H. Taylor Scholar in Health Care
and Retirement Policy, American Enterprise Institute,
202/862-5938
CANDIDATES' VIEWS
Senator Kerry has said that he favors changing the
new Medicare law, so that the secretary of Health and
Human Services would be required to negotiate drug
discounts for Medicare beneficiaries, as the
Department of Veterans Affairs does now for
veterans. He offers several other proposals to lower
drug costs, including making it easier for generic
drugs to come to market.38
The Bush administration believes that new
pharmaceutical coverage for seniors through
Medicare and drug discount cards, sponsored by
government and private entities, are the best vehicles
for providing relief from prescription drug cost
pressures for Medicare beneficiaries. The president
couples this proposal with initiatives to expand
private coverage (including drug coverage) using tax
credits, high-deductible health plans paired with
savings accounts, and new pooling arrangements for
small businesses.39
The Bush administration has opposed reimportation,
arguing it is potentially both unsafe and unlikely to
result in substantial savings to the U.S. health
system. However, President Bush was showing more
openness to the idea in late summer 2004. Senator
Kerry supports drug reimportation.
Robert Berenson, Senior Fellow, The Urban Institute ,
202/833-7200
Aidan Hollis, Associate Professor, University of Calgary,
403/220-5861
Linda Bilheimer, Senior Program Officer, The Robert
Wood Johnson Foundation, 609/627-7530
Julie James, Principal, Health Policy Alternatives,
202/737-3390
Barbara Cooper, Director for the Commonwealth Fund
Program on Medicare Future, The Commonwealth Fund,
212/606-3800
Chris Jennings, President, Jennings Policy Strategies,
202/879-9344
Karen Davis, President, Commonwealth Fund, 212/6063800
Joseph DiMasi, Director of Economic Analysis, Tufts
Center for the Study of Drug Development, 617/636-2116
58
SOURCEBOOK FOR JOURNALISTS, 2004
Marilyn Moon, Vice-President and Health Program
Director, American Institutes for Research, 301/592-2101
Patricia Neuman, Vice-President and Director of Medicare
Policy Project, Kaiser Family Foundation, 202/347-5270
Judy Feder, Dean, Georgetown Univ. Health Policy
Institute, 202/687-0880
Frank Palumbo, Professor and Director of the University
of Maryland's Center on Drugs and Public Policy,
University of Maryland, 410/706-2303
Beth Fuchs, Principal, Health Policy Alternatives,
202/707-7367
Enzo Pastore, Health Policy Director, Center for Policy
Alternatives, 202/387-6030
Henry Grabowski, Professor of Economics, Duke
University, 919/660-1839
Ron Pollack, Executive Director, Families USA, 202/6283030
Robert Helms, Resident Scholar, American Enterprise
Institute, 202/862-5877
Uwe Reinhardt, Professor of Economics and Public
Affairs, Princeton University, 609/258-4781
David Herman, Executive Director, Seniors Coalition,
800/325-9891
John Rother, Director of Policy and Strategy, AARP,
202/434-3701
For updates, go to www.allhealth.org
ALLIANCE FOR HEALTH REFORM
SOURCEBOOK FOR JOURNALISTS, 2004
Bruce Stuart, Executive Director, Peter Lamy Center for
Drug Therapy and Aging, School of Pharmacy, University
of Maryland, 410/706-2434
John M. Vernon, Professor of Microeconomic Principles,
Duke University, 919/660-1829
Bruce Vladeck, Professor of Health Policy and Geriatrics,
Mt. Sinai School of Medicine, 212/241-3845
Stanley Wallack, Executive Director of the Schneider
Institute for Health Policy, Brandeis University, 781/7363901
Gail Wilensky, Senior Fellow, Project HOPE, 301/6567401
Dale Yamamoto, Health Actuarial Practice Leader, Hewitt
Associates, 847/295-5000
Government and Related Groups
Alan Holmer, President and CEO, Pharmaceutical
Research and Manufacturers of America, 202/835-3420
Karen Ignagni, President and CEO, American's Health
Insurance Plans, 202/778-3203
Kathleen Jaeger, President and CEO, Generic
Pharmaceutical Association, 703/647-2390
Steve Jennings, Principal, Express Scripts, 202/216-2265
Mary Nell Lehnhard, Senior Vice President, Blue
Cross/Blue Shield Association, 202/626-4781
Ed Mihalski, Director of Federal Affairs Public Policy
Planning and Development, Eli Lilly, 202/434-1020
Janet Newport, Corporate Vice President of Regulatory
Affairs, PacifiCare Health Systems, 714/825-5052
Jeff Sanders, Senior Vice President, Advance PCS,
480/319-4287
Leonard Schaeffer, Chairman of the Board of Directors
and Chief Executive Officer, Wellpoint Health Networks,
805/557-6000
Lynn Bosco, Director, Center for Outcomes and
Effectiveness Research/AHRQ, 301/427-1490
Ian Spatz, Executive Director Federal Public Policy,
Merck and Co., 202/638-4170
Laura Dummitt, Director Health Care - Medicare Payment
Issues, U.S. Government Accountability Office, 202/5127119
Kate Sullivan, Director of Health Policy, U.S. Chamber of
Commerce, 202/463-5734
Ann Marie Lynch, Deputy Assistant Secretary for
Planning and Evaluation, DHHS, 202/690-6870
Sally Walsh, Vice President of Federal Government
Relations, Taxes, and Pharmaceuticals, GlaxoSmithKline,
202/715-1000
Deborah Platt Majoras, Chairman, Federal Trade
Commission, 202/326-2180
Richard Price, Section Head for Healthcare and Medicine,
Congressional Research Service, 202/707-7370
Daniel E. Troy, Chief Counsel, Food and Drug
Administration, 301/827-1137
Stakeholders
Ken Bowler, Vice President for Federal Relations, Pfizer,
202/783-7070
Phillip Burgess, National Director of Pharmacy Affairs,
Walgreens, 847/914-3241
John Coster, Vice President of Federal and State
Programs, National Association of Chain Drugstores,
703/549-3001
6
Prescription Drugs
Stephen Schondelmeyer, Director and Department Head
of Pharmacology Care & Health Systems, PRIME
Institute, University of Minnesota, 612/624-9931
CHAPTER 6
Susan Winckler, Staff Counsel and Vice President for
Policy and Communications, American Pharmacists
Association, 202/628-4410
Websites
AARP
www.aarp.org
Alliance for Health Reform
www.allhealth.org
American Enterprise Institute
www.aei.org
American Institutes for Research
www.air.org
Centers for Medicare and Medicaid Services
www.medicare.gov
Diana Dennett, Executive Vice President, America's Health
Insurance Plans, 202/778-3259
The Commonwealth Fund
www.cmwf.org
Robert Freeman, Executive Director of Public Policy,
AstraZeneca Pharmaceuticals, 302/886-4489
Congressional Budget Office
www.cbo.gov
Dan Haron, Vice President of Pharmacy Operations,
Brooks Pharmacy, 401/825-3900
ALLIANCE FOR HEALTH REFORM
For updates, go to www.allhealth.org
59
Prescription Drugs
CHAPTER 6
6
SOURCEBOOK FOR JOURNALISTS, 2004
Energy and Commerce Committee, U.S. House
http://energycommerce.house.gov
Medicare Payment Advisory Commission
www.medpac.gov
Families USA
www.familiesusa.org
National Association of Chain Drug Stores
www.nacds.org
Federal Trade Commission
www.ftc.gov
National Institute for Health Care Management
www.nihcm.org
Finance Committee, U.S. Senate
http://finance.senate.gov
Pharmaceutical Care Management Association
www.pcmanet.org
Food and Drug Administration
www.fda.gov
The Pharmaceutical Research and Manufacturers of
America (PhRMA)
www.phrma.org
The Generic Pharmaceutical Association
www.gphaonline.org
Health Affairs
www.healthaffairs.org
Hewitt Associates
http://was4.hewitt.com/hewitt
The Robert Wood Johnson Foundation
www.rwjf.org
Ways and Means Committee, U.S House
http://waysandmeans.house.gov
The Kaiser Family Foundation
www.kff.org
ENDNOTES
60
a
Smith, Cynthia (2004). "Retail Prescription Drug Spending in the National Health Accounts." Health Affairs,
January/February, p. 162. (www.healthaffairs.org). Retrieved May 13, 2004.
b
Heffler, Stephen et al. (2004). "Health Spending Projections through 2013." Health Affairs, February 11, p. W4-81, W4-83.
(http://content.healthaffairs.org/cgi/content/full/hlthaff.w4.79v1/DC1). Retrieved May 13, 2004.
c
McArdle, Frank et al. (2000). "The Implications of Medicare Prescription Drug Proposals for Employers and Retirees."
Hewitt Associates LLC, July, p. 15.
d
Holtz-Eakin, Douglas (2004). "Estimating the Cost of the Medicare Modernization Act." Congressional Budget Office,
testimony of CBO Director before the House Ways & Means Committee, March 24.
(http://www.cbo.gov/showdoc.cfm?index=5252&sequence=0). Retrieved May 10, 2004.
e
Cockburn, Iain M. (2004). "The Changing Structure of the Pharmaceutical Industry." Health Affairs, 23(1), p. 12.
(www.healthaffairs.org). Retrieved May 18, 2004.
f
Carpenter, Daniel P. (2004). "The Political Economy of FDA Drug Review: Processing, Politics, and Lessons For Policy."
Health Affairs, 23(1), p. 58, 59. (www.healthaffairs.org). Retrieved May 18, 2004.
g
Schacht, Wendy H. & John R. Thomas. (2004). "The Hatch-Waxman Act: Legislative Changes Affecting Pharmaceutical
Patents." Congressional Research Service, February 19, p. 6, 7.
h
National Conference of State Legislatures (2004). "State Pharmaceutical Assistance Programs." April 20.
(www.ncsl.org/programs/health/drugaid.htm). Retrieved May 18, 2004.
1
Pharmaceutical Research and Manufacturers of America (2004). "The Value of Medicines: Longer and Better Lives, Lower
Health Care Spending, A Stronger Economy." April 24. (http://www.phrma.org/publications/policy/24.04.2004.983.cfm).
Retrieved May 13, 2004.
2
Smith, Cynthia (2004). "Retail Prescription Drug Spending in the National Health Accounts." Health Affairs,
January/February, p. 162. (www.healthaffairs.org). Retrieved May 13, 2004.
For updates, go to www.allhealth.org
ALLIANCE FOR HEALTH REFORM
SOURCEBOOK FOR JOURNALISTS, 2004
CHAPTER 6
Health Policy Alternatives Inc. (2003). "Pharmacy Benefit Managers (PBMs): Tools for Managing Drug Benefit Costs,
Quality, and Safety." August, p.5, 9. (http://www.pcmanet.org/2004_pdf_downloads/HPA_Study_Final.pdf). Retrieved May
13, 2004.
4
IMS Health (2004). "IMS Reports 9 Percent Constant Dollar Growth in '03 Global Pharma Sales." IMS Insights, March 15.
(http://www.imshealth.com/ims/portal/front/articleC/0,2777,6599_3665_45365325,00.html). Retrieved May 13, 2004.
5
Heffler, Stephen et al. (2004). "Health Spending Projections Through 2013." Health Affairs, February 11, p. W4-81, W4-83.
(http://content.healthaffairs.org/cgi/content/full/hlthaff.w4.79v1/DC1). Retrieved May 13, 2004.
6
Smith, Cynthia (2004). "Retail Prescription Drug Spending in the National Health Accounts." Health Affairs,
January/February, p. 162. (www.healthaffairs.org). Retrieved May 13, 2004.
7
The Kaiser Family Foundation (2003). "Impact of Direct-to-Consumer Advertising on Prescription Drug Spending." June, p.
2. (http://www.kff.org/rxdrugs/6084-index.cfm). Retrieved May 13, 2004.
8
Smith, Cynthia (2004). "Retail Prescription Drug Spending in the National Health Accounts." Health Affairs,
January/February, p. 166. (www.healthaffairs.org). Retrieved May 13, 2004.
9
Thomas, Cindy Parks, Grant Ritter, & Stanley S. Wallack (2001). "Growth in Prescription Drug Spending Among Insured
Elders." Health Affairs, Sept./Oct. (www.healthaffairs.org). Retrieved July 30, 2004.
10
National Institute for Health Care Management (2002). "Changing Patterns of Pharmaceutical Innovation." May, p.3.
(http://www.nihcm.org/innovations.pdf ). Retrieved August 24, 2004.
11
The Kaiser Family Foundation (2003). "Impact of Direct-to-Consumer Advertising on Prescription Drug Spending." June, p.
2. (http://www.kff.org/rxdrugs/6084-index.cfm). Retrieved May 13, 2004.
12
McArdle, Frank et al. (2000). "The Implications of Medicare Prescription Drug Proposals for Employers and Retirees."
Hewitt Associates LLC, July, p. 15. (http://www.kff.org/medicare/upload/13415_1.pdf). Retrieved May 18, 2004.
13
O'Sullivan et al. (2003). "Overview of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003."
Congressional Research Service, December 9, p. 11.
14
Holtz-Eakin, Douglas (2004). "Estimating the Cost of the Medicare Modernization Act." Congressional Budget Office,
testimony of CBO Director before the House Ways & Means Committee, March 24.
(http://www.cbo.gov/showdoc.cfm?index=5252&sequence=0). Retrieved May 10, 2004.
15
Wei, Lingling (2004). "Companies Expect Cost Savings From Medicare Act." Wall Street Journal, March 22.
16
McArdle, Frank, Kerry Kirkland, Dale Yamamoto, Michelle Kitchman, & Tricia Neuman (2004). "Retiree Health Benefits
Now and in the Future: Findings from the Kaiser/Hewitt 2003 Survey on Retiree Health Benefits." The Kaiser Family
Foundation and Hewitt Associates, January 14, p. 33. (http://www.kff.org/medicare/011404package.cfm). Retrieved April
27, 2004.
17
O'Sullivan et al. (2003). "Overview of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003."
Congressional Research Service, December 9, p. 11.
18
Kaiser Family Foundation (2004). "Medicare at a Glance." March. (http://www.kff.org/medicare/1066-07.cfm). Retrieved
May 18, 2004.
19
U.S. Food and Drug Administration Center for Drug Evaluation and Research (2004). "New Molecular Entities (NMEs)
Approved in Calendar Years 2002, 2003." (http://www.fda.gov/cder/rdmt/default.htm). Retrieved May 18, 2004.
20
Carpenter, Daniel P. (2004). "The Political Economy of FDA Drug Review: Processing, Politics, and Lessons for Policy."
Health Affairs, 23(1), p. 58, 59. (www.healthaffairs.org). Retrieved May 18, 2004.
21
Cockburn, Iain M. (2004). "The Changing Structure of the Pharmaceutical Industry." Health Affairs, 23(1), p. 12.
(www.healthaffairs.org). Retrieved May 18, 2004.
22
O'Reilly, Bill (1991). "Drugmakers Under Attack: Marketing Muscle, Patent Protection, and A Unique Relationship with
Consumers Have Made Them America's Most Profitable Industry" Fortune. 124 (3), p. 48. Retrieved May 27, 2004.
ALLIANCE FOR HEALTH REFORM
For updates, go to www.allhealth.org
Prescription Drugs
3
6
61
Prescription Drugs
CHAPTER 6
23
Schacht, Wendy H. & John R. Thomas. (2002). "The 'Hatch-Waxman' Act: Selected Patent-Related Issues." Congressional
Research Service, April, p. 2.
24
Schacht, Wendy H. & John R. Thomas. (2004). "The Hatch-Waxman Act: Legislative Changes Affecting Pharmaceutical
Patents." Congressional Research Service, February 19, p. 6, 7.
25
National Conference of State Legislatures (2004). "Recent Medicaid Prescription Drug Laws and Strategies, 2001-2003."
March 1. (www.ncsl.org/programs/health/medicaidrx.htm). Retrieved May 18, 2004.
26
National Conference of State Legislatures (2004). "State Pharmaceutical Assistance Programs." April 20.
(www.ncsl.org/programs/health/drugaid.htm). Retrieved May 18, 2004.
27
National Conference of State Legislatures (2004). "State Pharmaceutical Assistance Programs." April 20.
(www.ncsl.org/programs/health/drugaid.htm). Retrieved May 18, 2004.
28
National Conference of State Legislatures (2004). "Recent Medicaid Prescription Drug Laws and Strategies, 2001-2003."
March 1. (www.ncsl.org/programs/health/medicaidrx.htm). Retrieved May 18, 2004.
29
National Conference of State Legislatures (2004). "Recent Medicaid Prescription Drug Laws and Strategies, 2001-2003."
March 1. (www.ncsl.org/programs/health/medicaidrx.htm). Retrieved May 18, 2004.
30
Department of Health and Human Services (2004). "HHS Approves First-Ever Multi-State Purchasing Pools for Medicaid
Drug Programs." News Release, April 22. (www.dhhs.gov/news/press/2004pres/20040422.html). Retrieved May 18, 2004.
31
Tedeschi, Bob (2004). "Looking to Canadian Web Pharmacies for Savings." New York Times, March 8. (www.nexis.com).
32
Hughes, Bonnie & Nicole C. Pyhel, eds. (2003). "Drug Companies May Be Headed for a Bruising Battle as Drug
Reimportation Grows," The Wall Street Journal Online, October 9, p. 1.
(http://www.harrisinteractive.com/news/newsletters/wsjhealthnews/WSJOnline_HI_Health-CarePoll2003vol2_iss8.pdf).
33
IMS Health. (2004). "IMS Reports 11.5 Percent Dollar Growth in '03 U.S. Prescription Sales." News release, Feb. 17.
(www.imshealth.com).
34
Pear, Robert (2004). "U.S. to Study Importing Canada Drugs but Choice of Leader Prompts Criticism." New York Times,
Feb. 25. (www.nexis.com).
35
Congressional Budget Office (2004). "Would Prescription Drug Importation Reduce U.S. Drug Spending?" April.
(http://www.allhealth.org/recent/audio_07-22-04/CBOPrescriptionDrugImportation.pdf). Retrieved May 15, 2004.
36
Kerry/Edwards Campaign (2004). "A Plan for Stronger, Healthier Seniors."
(www.johnkerry.com/issues/health_care/seniors.html). Retrieved July 26, 2004.
37
Office of Senator Charles Grassley (2004). "Grassley says it should be legal to buy prescription drugs from Canada." Press
Release, April 8. (http://grassley.senate.gov/releases/2004/p04r04-08a.htm). Retrieved May 18, 2004.
38
"Kerry Health Plan Would Force Drugmakers to Accept Lower Prices," Bloomberg.com, Aug. 2, 2004,
(http://quote.bloomberg.com/apps/news?pid=71000001&refer+us&sid=aPeiNICRh3KA) Retrieved Aug. 24, 2004.
39
George W. Bush 2004. "Making Health Care More Accessible and Affordable,"
(www.georgebush.com/healthCare/Brief.aspx) Retrieved. 23, 2004.
6
62
SOURCEBOOK FOR JOURNALISTS, 2004
For updates, go to www.allhealth.org
ALLIANCE FOR HEALTH REFORM