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Merck to Discount Drugs for Uninsured

Prices to Compare to Canadian Imports

By Michael S. Rosenwald
Washington Post Staff Writer
Wednesday, April 20, 2005; Page E02

Drug manufacturer Merck & Co. will provide uninsured Americans steep discounts for many of its prescription medicines, joining other pharmaceutical firms in slashing some prices during debate over importing drugs from Canada.

Margaret G. McGlynn, Merck's president of human health, said the program was not a specific response to millions of Americans ordering name-brand drugs from Canada at prices far less than companies such as Merck charge in the United States.

"We want to make sure everyone who needs prescription drugs has access," McGlynn said. "But if a side effect is that they don't go to Canada, that's all the better." There are 45 million people in the United States without health insurance.

Nearly 5 million shipments, comprising about 12 million prescription drug products valued at about $700 million, entered the United States from Canada in 2003 as a result of Internet sales and cross-border visits, according to Bush administration studies. Many U.S.-made pharmaceuticals are cheaper in Canada because of government price controls there.

Merck's new discount program, to be launched Monday, will bring prices closer in line with those found in Canadian pharmacies.

For instance, Merck will discount Fosamax, its popular treatment for osteoporosis, by 22percent, slashing the price for a month's supply of 70 milligram tablets from $82.86 to $65. Many Canadian pharmacies on the Web advertise the same quantities for about $60. The drug accounted for $3.2 billion of Merck's nearly $23 billion in 2004 sales, or about 14 percent.

The average insurance co-payment for Fosamax is about $22, Merck officials said.

Ten other popular Merck drugs, including treatments for high cholesterol, prostate enlargement and asthma, will be discounted between 15 percent and 40 percent.

Unlike a prescription drug discount program announced in January by an alliance of 10 drug companies, including Pfizer Inc., Merck's program will not require people to prove they are uninsured with low incomes.

Instead, people can sign up online, at pharmacies, by calling a toll-free number or by mail. Until they sign up, people can use coupons for 10 percent discounts that will be available at pharmacies, doctors' offices, clinics, churches and community centers.

Merck officials did not release figures on what the program will cost the company, which lost $26 billion in market value in September after pulling pain reliever Vioxx off the market following concerns that the drug caused heart problems and strokes.

Albert L. Rauch, an A.G. Edwards & Sons Inc. analyst who follows Merck, expected the cost of the discount program would be minimal because the significant expense in selling drugs comes during the research and development stage.

Discounting drugs "after you've already sunk the cost doesn't really create any new costs," Rauch said. He said Merck would recoup development costs by filling the great majority of prescriptions at full price.

The advantage to Merck and other companies discounting drugs for the uninsured is political, Rauch said.

"It's trying to head off political pressure that drugs are unaffordable and they cost too much," Rauch said. Families USA, a nonpartisan D.C. group that advocates for affordable health care, cautiously applauded Merck's announcement.

"Any help that is provided to uninsured people with their medicines is certainly welcomed," said Ron Pollack, Families USA executive director. "However, uninsured people are often unable to go to a physician because they can't afford to pay. . . . Therefore, they can't even get a prescription."

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