When Brant and Arlene Coopersmith were visiting Greece on a vacation and discovered that certain medications cost much less abroad, they were tempted to start an international shopping service for prescription drugs.
It started in Athens, when Arlene Coopersmith found she had not brought enough of her heart medicine -- a cardiac vasodilator called Persantine. The Coopersmiths went to get her prescription filled and found they could buy the drug for about a third of what they pay in the United States -- seven cents a pill, compared with 18 cents here. Considering that she takes six a day, the 11-cent cost difference was considerable -- $231 a year.
Another drug she was taking, they found, was a similar bargain overseas.
Coopersmith, 67, a "mostly retired" civil rights activist, is the outgoing chairman of the D.C. Lottery Commission. He did some checking and discovered what some experts have been worrying about for three years: Prescription drug costs have soared in this country, but not necessarily anywhere else.
"If you lived in Detroit and didn't go across the river to Canada to buy your drugs," said Coopersmith, "you'd be crazy."
Hearings on the skyrocketing cost of prescription drugs in America are scheduled to begin Monday before the House Energy and Commerce subcommittee on environment and health.
Part of the concern over the price increases is that pharmaceutical companies may have used the additional revenue in an advertising campaign against generic drugs, said subcommittee chairman Rep. Henry A. Waxman (D-Calif.). Waxman was chief sponsor of last year's compromise legislation designed to encourage the development of generic drugs in exchange for longer exclusive rights for the brand-name drug's initial developer.
However, he said last week, "the companies broke their commitments and launched an aggressive antigeneric campaign . . . spending millions of dollars on false and misleading advertising to scare doctors, pharmacists and consumers away from generic drugs."
Waxman is especially concerned about the price increases since "80 percent of Americans pay for their prescription drugs out-of-pocket because Medicare and most private health insurance companies do not cover drugs" except during a hospital stay.
"As a result, the elderly on their fixed income and people with low incomes or chronic illnesses are particularly affected by drug price increases," he said. "After years of moderate rise, the price increases for prescription drugs in the past four years are startling. I believe they are causing severe hardship for the poor."
The Pharmaceutical Manufacturers Association acknowledges that drug prices have risen at a significantly higher rate than the consumer price index over the past five years, but notes that this rise followed a long period -- about 15 years -- in which the increases were lower. In fact, said PMA president Gerald J. Mossinghoff, whose organization represents most of the $17.5 billion-a-year pharmaceutical industry, "we're still playing catch-up."
Research and development costs have skyrocketed, Mossinghoff notes, and the industry has "doubled its funds for research and development every five years since 1975, reaching an estimated $4 billion for this calendar year.
"The cost to develop a new drug is increasing drastically. We now estimate that it takes from eight to 10 years to develop and get approval, and the cost is edging toward $100 million."
Finally, he said, demand and profits in the drug industry have been static for the past few years, falling considerably behind costs. Firms have been divesting themselves of marginal products, laying off workers and raising prices to help meet the increased costs.
Mossinghoff, until a few months ago the commissioner of the U.S. Patent and Trademark Office, said one reason the prices of specific drugs may be lower in other countries is the lack of patent and trademark protection overseas. "The pharmaceutical industry is losing hundreds of millions of dollars as a result of patent piracy and infringement in developing nations," he testified last month at a hearing conducted by the Office of the United States Trade Representative. He urged that special treatment given to developing and semi-developing nations be tied to their willingness to protect "intellectual property."
The strength of the dollar abroad, a boon to tourists, can be costly to U.S. companies, he said. Many major pharmaceutical houses, which market their products in other countries -- some of which subsidize health costs and therefore control drug prices -- clearly lose when the currency is translated back into dollars. But he said this is a "minuscule" part of the problem. He said he believed there was strong bipartisan support on Capitol Hill to address the piracy problem, and he named several countries where protection is particularly poor, including Mexico, Brazil, Argentina, Korea, Taiwan and Yugoslavia. In some of these countries without protection, the pirated generic is sold before the brand-name drug is approved for sale. TT he American Association of Retired Persons, which, among other serT vices, runs a nonprofit, mostly mail-order prescription drug pharmacy for its members, is concerned at the impact of increased drug costs to its members.
"The price increases in the last four years have been occurring with astonishing frequency, and there's no alternative when generics are not available," said AARP health analyst Judith Brown. "These consumers are sick, largely elderly people, and there is a moral issue here of how much you arbitrarily charge."
She cites one particular drug -- Feldene -- an anti-inflammatory arthritis drug that need be taken only once a day, which "does represent a therapeutic advantage for the elderly." The drug, for which there is no generic equivalent, "went up 12 percent in August 1983, then in October 1984 another 12 percent, and in June 1985 still another 12 percent," according to John McHugh, president of the AARP Pharmacy Service. And it is a drug, he said, "that is very big with the elderly."
McHugh will testify before the subcommittee on a dozen or so other drugs particularly useful for the elderly that have undergone major price hikes within the past several years.
"That drug [Feldene] was a real breakthrough," said Mossinghoff, "and people are a lot better off for Pfizer having been able, through its research program, to have had that. It has probably improved the quality of the lives" of those using it.
Such drugs, he said, are particularly cost effective. And because medications account for only "6.9 percent of everyone's health dollar," insurers should more readily pay the price.
"Our view is that drug costs should be covered" by Medicare and health insurers, he said. Pharmaceutical manufacturers are concerned, he said, "that in an effort to save targeted amounts of money, people are hurting the most cost-effective form of health care. So we are determined to try to tell our story that if you focus in on the seven cents out of the dollar that is used to create a Feldene or a Tagomet an anti-ulcer drug or one of those things, it is really being penny wise and pound foolish."