Today
Governor Ritter signed an executive order to allow Colorado to
establish a preferred drug list and to then join a multi-state
prescription drug purchasing pool.
American consumers pay too much for prescription drugs. In 2003,
Americans spent $203.1 billion on prescription drugs, an increase of
$20.4 billion from the previous year. Prescription drug costs increased
at more than three times the rate of inflation from January 2003 to
January 2004. The high price of prescription drugs has helped the
pharmaceutical industry remain consistently profitable, even in a
stagnant economy. In 2001, it ranked first of any industry in rates of
return on equity, assets, or revenues. It has been the most profitable
industry in the United States for the past 10 years. The combined
profits of the 10 drug companies in the Fortune 500 ($35.9 billion)
amounted to more than the profits for all the other 490 businesses put
together ($33.7 billion) in 2002.
On average, uninsured consumers in Colorado pay 77% more than the
federal government for 12 common prescription medications. Uninsured
consumers in Colorado pay twice as much, 102% more, for drugs purchased
at their local pharmacy than they would pay if they purchased the same
drugs from a Canadian pharmacy. “When the 41 million uninsured
Americans go it alone at the drug store, they pay the price—sometimes
more than double what government agencies pay to buy the same drugs in
bulk for large groups of consumers,” said Rex Wilmouth, Director of
CoPIRG, a state-wide consumer advocacy group.
Uninsured consumers carry the full cost of overpriced prescription
drugs. The federal government uses its buying power to negotiate lower
prices for the drugs it purchases for its beneficiaries, such as
veterans, government employees and retirees. Uninsured consumers, with
no one to negotiate on their behalf, pay the highest prescription drug
prices not only in America, but in the rest of the industrialized world
as well. “ Prescription drug buying pools are simply good medicine for
runaway health care costs,” said Wilmouth.
“HMOS
and t he federal government use their buying power to negotiate fairer
prices for the drugs they purchase,” said Wilmouth. “Unfortunately,
uninsured consumers have no one doing the same on their behalf so drug
companies are making money hand over fist, profiting the most from
chronically-ill Americans without prescription drug coverage .”
CoPIRG has urged Colorado to apply to be part of a multi-state
prescription drug-buying pool that would allow the government agencies
and individuals to use their combined buying power to negotiate lower
drug prices. States that are pooling their collective purchasing power
to gain deeper discounts include Alaska, Michigan, Vermont, New
Hampshire, Nevada, Minnesota, Hawaii, Montana, Delaware, Missouri, New
Mexico, West Virginia, and Ohio. In 2004, Michigan estimates that it
will save $8 million, Vermont $1million, Alaska $1 million, Nevada $1.9
million, and Minnesota $11 million. The Governor’s executive order will
allow Colorado to create a list of drugs to then join other states in a
multi-state Rx drugs buying pool.
“This is a practical, time-tested, free market approach to lowering prescription drug costs,” said Wilmouth.
