The current economic downturn—the worst since the 1980s—disproportionately savaged millions of the nation’s seniors because they tend to use more medications and depend on fixed incomes that cannot keep up with spiraling costs, Greider writes. The elderly on fixed incomes struggle to pay for life-saving prescription drugs that have risen in price by more than 15 percent a year—five times the rate of inflation for the past several years, according to The Big Fix. One result: 29 percent of Americans failed to fill a prescription in 2000 because they could not afford to, says Greider.

While families struggle to pay for medicine and deal with an increasingly bleak economic picture, drug makers prosper. In 2001, as the economy tumbled and corporate profits sank for the average Fortune 500 company, drug companies on the top 500 list saw their profits soar by 33 percent from the previous year, Greider reports.

The nine largest pharma giants raked in $30.6 billion in 2001 profits. During the past decade, drug firms’ profits represented an 18.5 percent return on revenue or 5.6 times the median return (3.3 percent) of Fortune 500 companies. As the economy soured further in 2002, many drug companies continued to grow and thrive.

Working families and seniors may worry about skyrocketing prescription drug costs, but big pharma executives are not likely to be choosing between blood pressure medicine and buying groceries: The five most highly paid drug company executives pocketed more than $183 million in compensation in 2001, with the top 25 pharmaceutical execs averaging nearly $6 million in annual compensation in 2000. That compensation does not count stock options, which can add millions of dollars to a CEO’s income. In 2000, Greider reports, the chairman and CEO of Bristol-Myers Squibb held unexercised options valued at $227.9 million. (For the latest information on executive pay in the pharmaceutical and other industries, visit the AFL-CIO’s Executive PayWatch.)

Skipping medicine to afford his bills   After 37 years in LTV Corp.’s steel mills, steelworker Chuck Kurilko was forced to retire in November 2001 because of his deteriorating health. Today, Kurilko, 57, takes some 18 different prescription medicines to treat his diabetes, heart condition and other health problems. His wife, Carolyn, needs eight prescription drugs for her ailments. Since early 2003, the Garfield Heights, Ohio, couple has been without health coverage and prescription drug benefits. As a result, the Kurilkos pay between $800 and $900 a month out of pocket for their prescription medications. At the time Kurilko retired, LTV retirees paid $149 a month in health care premiums that included some prescription drug coverage, and he received a $2,500 a month pension. But in early 2002, after LTV filed for bankruptcy, the Kurilkos were forced to use the health coverage option, the Consolidated Omnibus Budget Reconciliation Act (COBRA) offered through the federal government. COBRA helps workers maintain their post-employment health insurance. Kurilko is among hundreds of thousands of retired manufacturing workers forced to pick up the costs of health coverage after the companies they worked for throughout their lives go bankrupt. At first, Kurilko’s COBRA premium cost $1,305 a month. Then in January, Kurilko received some startling news: “They told me the premium was going up to $2,864 a month. That was a death sentence to me. I just can’t pay that,” he explains. That bad news came on the heels of the takeover of LTV’s pension plan by the federal Pension Benefit Guaranty Corp.—a move that reduced Kurilko’s pension to $1,500 a month. The couple now stretches their medicine by skipping or taking smaller doses. They buy smaller quantities, hoping that by the next week or so they’ll have enough money to refill the prescriptions. In March, they found a service that could help them buy their needed drugs from Canada at much lower prices. “Every other major country in the world has some kind of universal health care plan and helps people buy their medicines,” says Kurilko. “Why this country doesn’t is beyond me.”

Same drug, different patent: Anyone who watches television—where the majority of the drug industry’s $2.5 billion a-year-and-growing advertising budget is spent—has seen commercials for AstraZeneca’s acid-reflux drug Nexium®. The ad money worked: Consumers spent $458 million on Nexium, at an average cost of $117 per prescription in 2001, the first year it was introduced.

Acid-reflux sufferers could have found just as much relief in an older product that drug experts call virtually identical—Prilosec®. Ironically, Prilosec is made by the same firm that put the Nexium hype into overdrive. Is AstraZeneca cannibalizing its Prilosec profits? Not by a long shot.

Prilosec’s patent was set to expire in October 2002, opening the door for other companies to jump into the market with cheaper generic versions. So by tinkering with the formula, AstraZeneca received a new patent and extra years of exclusivity to convince consumers the new product, Nexium, is not only better than the nearly indistinguishable older drug but is also worth the extra cost.

The cost of prescriptions for two new oral diabetes drugs jumped 62 and 41 percent in 2001, and on average the costs for the new drugs are twice as much as for the effective older oral diabetes medicines.

“The increase in prescriptions—and in spending,” writes Greider, “is largely attributable to the rapid market penetration of a small number of new, expensive best sellers.” In 2000 and 2001, “vast outlays for only 27 drugs were responsible for about half the nation’s increased drug spending.”

Get the Word Out About “The Big Fix”

The Alliance for Retired Americans' Rx Express will roll across the Canadian border again this year. Arrange for some of your union's retirees to take part and let local media know. Visit www.retiredamericans.org, or call 1-888-373-6497. Union leaders and activists can use The Big Fix: How the Pharmaceutical Industry Rips Off American Consumers to mobilize union members, educate lawmakers and rally communities around the fight for prescription drug legislation at the state and federal levels. At your next local union meeting, central labor council gathering or state federation convention, hold a discussion on the cost of prescription drugs, excerpting information from this article, and have a drawing for a copy of the book. Distribute copies of this article, or let members know it can be found on the AFL-CIO website at www.aflcio.org. Reprint this story in your local union publications. Get the word out about The Big Fix to community allies, including civil rights, women’s, faith and other groups. Order copies of the book from the AFL-CIO at www.aflcio.org/shop or pick them up from your local bookstore. Contact your local newspapers and radio and television stations to review The Big Fix and offer to provide them with stories from union members or other working families struggling to pay for their prescription drugs. Send books to state legislators and urge them to support action for affordable prescription drug legislation. Work with state legislators to hold a forum in your state capitol or a local town hall meeting. Find out more from the consumer coalition Fair Drug Prices at www.fairdrug prices.org and the health care consumer group Families USA at www.familiesusa.org. Copies of The Big Fix are available for $14 through the AFL-CIO Support Services Department, 202-637-5042 (in Washington, D.C.) or 1-800-442-5645, or at www.aflcio.org/shop. Copies also are available in local bookstores.

Drug cost depends on who’s buying:
While consumers pay twice as much for new diabetes drugs or $117 for a Nexium prescription, the real cost of the drugs depends on who’s buying them. “It is a unique feature of the drug industry that there is no set price for its product,” Greider points out.

Because they want to corner the market on popular drugs, drug makers who manufacture competitive drugs, such as Zocor®, Mevacor® or Lipitor® for cholesterol control, curry favor with volume buyers—federal agencies such as the Defense Department and the Veterans’ Administration—through lower prices. Other bulk buyers, including hospitals, HMOs, insurers and pharmacy benefit managers (PBMs)—the for-profit companies that insurers and large employers hire to administer drug benefits—also get price breaks.

Uninsured, cash-paying individuals pay the most. Greider says on average the same drug that costs a cash-paying patient $100 costs the federal government $58 and costs private insurers or PBMs $70 to $95. And no one knows a drug’s real wholesale price or what discounts other customers receive because the drug industry claims that such information is a trade secret—proprietary information.

Taking statewide action   After working 44 years at the Hathaway Shirts factory in Waterville, Maine, retired UNITE member and Alliance for Retired Americans activist Vi Quirion knows the value of political action. She also is keenly aware of the high cost of prescription drugs. That’s why she was deeply involved in the 2000 fight to help low-income Maine residents win prescription drug coverage. Even as Quirion was fighting cancer and waiting to undergo knee replacement sur­gery, she joined union activists and senior groups to help pass landmark prescription drug legislation in the face of stiff and well-financed opposition from the giant drug industries. When the Maine legislature passed Maine Rx, the first law in the nation to provide price discounts for eligible citizens, the legislative victory was accompanied by a personal success: Quirion’s cancer went into remission. But two years later, the outlook is not as bright. Quirion, 79, endures weekly chemotherapy sessions to battle her recurring cancer, while struggling with complications from knee surgery. And the giant drug industry has bottled up Maine Rx in court for two years, with the case now before the U.S. Supreme Court. Despite poor health, Quirion—whose story is included in The Big Fix—travels regularly to Canada to purchase affordable prescription medication. She estimates that if she purchased antibiotics, cancer drugs and pain medication in the United States, she would pay $1,000 a month, compared with $500 or less a month in Canada. Health care and senior advo cates such as the Alliance for Retired Americans arrange bus trips across the border to take advantage of the lower prices. “If we had Maine Rx, it would be at least half of that, like what we pay in Canada,” she says. But the cross-border trips that save seniors and other modest-income U.S. residents millions of dollars every year could be jeopardized. Drug manufacturers are threatening legal action to halt the cross-border trade and say they will withhold some of their products from Canadian pharmacies that fill U.S. prescriptions. “They don’t care,” Quirion says. “They’re greedy. They’re not honest, and all they care about is the money.”

“Perhaps most galling,” Greider writes, “is our neighbors in Canada pay about 62 percent of what we do for the same medicines.” Sixty tablets of the cholesterol drug Zocor cost $43.97 in Canada and $109.43 just across the border in Vermont. The arthritis drug Relafen® runs $60 for 100 pills in Canada and $120.27 in Vermont. It’s no wonder more and more U.S. residents cross the border to fill prescriptions. In spring 2002, the Alliance for Retired Americans organized its first Rx Express bus trips to Canada, and 375 seniors saved more than half a million dollars on their prescriptions.

Unlike the United States, the governments of Canada and most other nations play a much bigger role in prescription cost control. Greider says the Canadian government buys about one-third of all drugs sold in the country to distribute to the elderly and low-income residents. In addition, Canada’s Patented Medicines Prices Review Board puts a ceiling on what drug makers can charge—and enforces it.

“The process is rife with opportunities for drug companies to mold the message that emerges from the research,” writes Greider. “Companies increasingly insist on designing studies and controlling raw data. If the results are unfavorable, drug makers are sometimes able to prevent them from coming to light.”