Chicago Consumers Pay More for Prescription Drugs While Pharmaceutical Profits Soar

An Investigation into Prescription Drug Price Discrimination in Chicago

August 2, 2000

Public Citizen and Metro Seniors in Action

Metro Seniors in Action: (312) 341-4733
407 South Dearborn
Suite 1015
Chicago, IL 60605

Executive Summary
Part One: Chicago Drug Price Survey

Thousands of Chicago senior citizens without prescription drug coverage face price discrimination by pharmaceutical manufacturers. A price survey of twenty-three randomly selected pharmacies in Chicago, conducted by the national consumer group Public Citizen and the Chicago-based group Metro Seniors in Action shows seniors are being charged retail prices about double the prices charged by prescription drug makers to their most favored customers.

Metro Seniors in Action members surveyed the prices of ten of the most widely prescribed drugs for older adults at randomly selected pharmacies in the city of Chicago. The retail price was compared to the best federal price, which according to the U.S. General Accounting Office is equivalent to the price pharmaceutical manufacturers charge their most favored customers. Prices charged to local seniors wereabout double-- 101% more-- than the most favored customer price.

For the top ten drugs used by seniors to treat a variety of illnesses, those in Chicago paid between 45% and 225% more than drug companies' most favored customers:

(*Includes $4 markup to reflect reasonable pharmacy dispensing fee. See
Survey Methodology at the end of this section for sources and notes.)

Part Two: Medicare Beneficiaries' Drug Coverage and Pharmaceutical Industry Price Discrimination and Profits

Instead of offering most favored prices to Medicare beneficiaries because of their huge collective buying power, pharmaceutical makers practice price discrimination against seniors and people with disabilities by charging them their highest retail prices. One out of three Medicare beneficiaries - 14 million older adults and people with disabilities - have no prescription drug coverage. They constitute a far larger purchasing block than any current customer receiving best price treatment from pharmaceutical manufacturers.

Millions of American seniors are suffering under this discriminatory pricing since Medicare does not cover outpatient prescription drugs. In addition to the 14 million beneficiaries who have no coverage for prescription drugs and therefore pay high retail prices totally out-of-pocket, many more older adults have inadequate or insecure insurance coverage with high deductibles and co-payments and low annual caps for coverage. Moreover, Medicare HMOs and employer plans are reducing drug coverage or raising costs for retirees.

The pharmaceutical industry profits handsomely from price discrimination. For decades, brand name prescription drug makers have consistently been among the most profitable industries in America. In 1998, pharmaceutical companies ranked first among all industries in rates of return on equity, assets, and revenues. Despite these high profits, the prescription drug industry pays much less in federal taxes than other major industries, according to a new study by the Congressional Research Service. Moreover, CEOs of the top twelve pharmaceutical companies last year averaged $18 million in annual compensation, including stock options, and now hold nearly $1 billion in unexercised stock options.

The industry claims that high U.S. prescription drug prices are necessary to fund research and development. But R&D is a lower priority than profits for the manufacturers. In 1999, the top twelve firms put nearly one-and-a-half times as much money into profits as into research and development. Moreover, not everyone pays such high prices. Foreign consumers get U.S.-made drugs at a fraction of the price paid by American senior citizens because their governments negotiate fair prices with prescription drug makers.

Congress is currently considering legislation to address the need for Medicare prescription drug coverage and to rein in skyrocketing drug prices. The major bills under consideration are the following:

• On June 28, 2000, the U.S. House of Representatives was scheduled to vote on H.R. 4680, the Medicare Rx 2000 Act, sponsored by Republican leaders and Rep. Bill Thomas (R-Calif.). The proposal is a political placebo designed to give election year coverage to candidates. It does not guarantee that Medicare will provide prescription drug coverage; instead, it encourages the private insurance industry to offer Medicare beneficiaries prescription drug insurance and it will force more and more seniors into HMOs to get coverage. The Republican bill has a monthly premium of $37, 50% higher than the Democratic plan. It has a deductible of $250, which will discourage people from getting their needed drugs in the first place. And it only covers one-half of the first $2,100 in expenses for low-income people (135% of poverty, or $10,800 single/$13,600 couple) and covers nothing from $2,350 to $6,000 in expenses for any beneficiary, no matter what a person's income. Moreover, H.R. 4680 will only reduce drug prices a modest 15% off the retail level, an insufficient savings given the price gouging and huge profit margins of drug companies.

• President Clinton and congressional Democrats have offered their own versions of reform. Their bills establish guaranteed drug coverage under Medicare, much as hospital and physician coverage is provided by Medicare. The proposals also provide a comprehensive benefit package with a $25 monthly premium, no deductible and full coverage for drug costs over $4,000 no matter what your income level. However, cost sharing requirements for people above 150 percent of the poverty level ($12,000 single/$15,100 couple) are too high -- 50 percent -- out of a maximum of $4,000 in drug costs. Moreover, the Democratic plans do not do enough to contain rising drug costs as they rely on Pharmacy Benefit Managers (PBMs) to negotiate drug discounts rather than permit the Medicare program to negotiate prices with the drug companies. PBMs currently achieve savings of about 15 percent off the retail level whereas the Department of Veterans Affairs (VA) negotiates a 50 percent discount off the retail price. This concept of Medicare negotiating prices, as the VA does, is also embodied in the Prescription Drug Fairness for Seniors Act (H.R. 664/S. 731) described below.

• "The Prescription Drug Fairness for Seniors Act" (H.R. 664/S.731) would not provide Medicare drug coverage so it is only half a solution to the prescription drug problem facing seniors and people with disabilities. But it would rein in high drug costs by harnessing the buying power of 39 million Medicare beneficiaries to allow seniors and the disabled access to substantially lower drug prices. Pharmacies would purchase drugs for Medicare beneficiaries from the manufacturer at the same low prices charged favored customers such as the Departments of Defense and Veterans Affairs. Since these prices are about half the retail prices paid by Medicare beneficiaries without prescription drug coverage, seniors will benefit from substantial cost savings even after fair pharmacy dispensing fees are included. H.R. 664/S. 731 has more support than any other prescription drug reform legislation in Congress - 153 House and 12 Senate co-sponsors as of July 11, 2000.

Nine U.S. Representatives from Illinois, five from Chicago including Representatives Bobby Rush, Jesse Jackson, Jr., Luis Gutierrez, Rod Blagojevich, and Danny Davis have joined more than 160 of their colleagues as co-sponsors of "The Prescription Drug Fairness Act for Seniors" (H.R. 664/S. 731). Chicago seniors and people with disabilities want the other members of our congressional delegation to sponsor H.R. 664 and S. 731 and to support a comprehensive Medicare prescription drug benefit that negotiates lower drug prices for beneficiaries.

Part One
Chicago Seniors Pay
Twice as Much as Most Favored Customers

The prescription drug price survey conducted by Public Citizen and Metro Seniors in Action found that Chicago seniors and people with disabilities without prescription drug coverage are victims of price discrimination by pharmaceutical manufacturers. The random sampling of 23 local pharmacies in Chicago found that consumers pay twice as much for retail prescription drugs as most favored customers, such as the Departments of Veterans Affairs and Defense. For standard dosages of ten brand name patent drugs most commonly prescribed for seniors, the survey found that Chicago older adults pay on average about 101% more than most favored customers - $172 versus $85 for equivalent dosages.⁽¹⁾

Instead of offering most favored customer prices to Chicago Medicare beneficiaries because of their collective buying power, the survey found that pharmaceutical makers practice price discrimination against seniors by charging them their highest retail prices. The retail price that these seniors pay, as compared to the most favored customer price, ranged from 225% more for the cholesterol drug Zocor to 45% more for the ulcer drug Pepcid.

Table 1: Chicago Prescription Drug Price Survey Results

(*Includes $4 markup to reflect reasonable pharmacy dispensing fee. See
Survey Methodology at the end of this section for sources and notes.)

Osteoporosis is a major threat for 28 million Americans, 80% of whom are women. One out of every two women and one in eight men over 50 will have an osteoporosis-related bone fracture in their lifetime. The survey found that Chicago seniors pay 81% more for Merck's osteoporosis drug Fosamax than most favored customers.

Diabetes afflicts twice as many people over 65 as under that age; about 12.5% of seniors have the condition. Warner Lambert's diabetes drug Rezulin costs Chicago seniors 71% more than the company's most favored customers pay.

One-third of those over 65 have high cholesterol, a prime risk factor for life-threatening heart diseases and strokes if it is not controlled. The survey found that Chicago seniors pay 48% more for Warner Lambert's Lipitor and 225% more for Merck's Zocor than most favored customers.

Those over 65 are almost ten times more likely to suffer a stroke than younger persons. Roche's stroke medication Ticlid costs Chicago seniors 118% more than most favored customers pay.

High blood pressure (hypertension) affects almost 40% of those over 65. For Chicago seniors, Pfizer's Norvasc, which controls high blood pressure, is priced 80% higher than the company charges its most favored customers.

Nearly 25 million Americans currently suffer from ulcer disease; the condition is more common in those over 65 than in younger people. Chicago seniors pay 45% more for Merck's Pepcid, 160% more for Abbott's Prevacid, and 97% more for AstraZeneca's Prilosec than the companies charge their most favored customers for the same drug.

Late-life depression affects six million seniors, most of them women; older people with significant symptoms of depression have roughly 50% higher healthcare costs than non-depressed seniors. Pfizer's anti-depressant Zoloft is 84% more expensive for Chicago seniors than for most favored customers.

Stories of Chicago Seniors Who Can't Afford Prescription Drugs

There are thousands of senior citizens and people with disabilities in Chicago without any prescription drug coverage. Thousands more are having a hard time trying to pay for their prescription drugs. Here are the stories of three Chicago seniors, members of Metro Seniors in Action, who are struggling to get the drugs they need. They are all Medicare beneficiaries who would benefit from legislation that would provide Medicare drug coverage and allow them to purchase drugs at the most favored prices.

Frieda Hurlong, a Chicago native and widow living on a fixed income, knows the importance of following doctors' instructions when it comes to taking prescription drugs. Frieda, a 1961 graduate of the Mother Caprini Practical Nursing School, was a licensed practical nurse for 25 years. Frieda is also a diabetic. Despite knowing that she could become seriously ill or even die without her insulin injections, Frieda was unable to purchase her needed prescription drugs this past May. "When the druggist told me my prescriptions and syringes would cost me $332.96, I told him never mind. I simply couldn't pay for them and had to skip my medications for an entire month. I talked to my doctor and now he's giving me free samples, so I hope I never have to go through that again."

Jo Ann Zenzen, age 61, is a diabetic with high blood pressure. She worked full time for over 40 years before rheumatoid arthritis forced her to retire. Her only source of income is the $664 disability payment she gets each month. In January, her physician put her on a new arthritis medication. The new prescription added an additional $250 a month to her regular $120 monthly prescription drug bill. Although Jo Ann pays $40 a month to belong to an HMO, the expensive drug is not on the list of drugs her HMO is willing to cover. This means that Jo Ann's out of pocket prescription drug costs come to more than half her total monthly income. After paying $200 for rent, plus utilities and buying food, she doesn't have enough to pay her $370 prescription drug costs out of her monthly income, and is reeling from the effects of the added expense. "Those two months depleted my savings account," said Jo Ann.

Lucy Curry, 71, was born and raised on the south side of Chicago. She worked as a nurse for over 40 years, delivering babies at the University of Chicago Hospital and staffing the emergency room at Illinois Research Hospital. Now, she is the one with medical needs. Lucy is suffering from arthritis, an enlarged heart, and blood clots in her lungs that require the constant use of an oxygen tank. Since Lucy cannot go anywhere without taking the heavy oxygen tank with her, she doesn't get out much anymore. After paying her monthly $200 prescription drug bill, plus rent, utilities, and health insurance, there's barely enough left to buy groceries. "These are supposed to be your golden years, not your starving years," said Lucy. Since her only income is the $700 a month she gets from Social Security, over 25% of her monthly income goes to purchase the prescription drugs she needs to live. "It's cheaper to die," said a discouraged Lucy.

Survey Methodology

The survey followed standard methodological protocols for a cross-sectional study with descriptive and analytic components.

Survey Drug Sample

The ten drugs selected for this survey were the most widely prescribed prescription drugs for senior citizens drawn from the 1998 list of the Pennsylvania Pharmaceutical Assistance Contract for the Elderly (PACE), as determined by dollar volume of sales. PACE is the largest state pharmaceutical assistance program for older adults and is frequently used as a data base for studies on prescription drug utilization by seniors. The dosages were the most commonly prescribed amounts according to the PACE data base. The top ten drugs did not include any generic drugs.

The ten drugs and their most commonly prescribed dosages were Fosamax (10 mg, 100 tablets), Lipitor (10 mg, 100 tablets), Norvasc (5 mg, 90 tablets), Pepcid (20 mg, 30 tablets), Prevacid (30 mg, 100 capsules), Prilosec (20 mg, 30 capsules), Rezulin (400 mg, 30 tablets), Ticlid (250 mg, 30 tablets), Zocor (20 mg, 60 tablets), and Zoloft (50 mg, 100 tablets).

Most Favored Customer/Best Federal Price

The most favored customer price was determined by the best federal price, usually the federal supply schedule price, provided by the Pharmacy Strategic Benefit Management Group of the Department of Veterans Affairs, which oversees the federal supply schedule prices. Neither the pharmaceutical industry nor the HMOs and large insurers make public drug prices paid by most favored private sector customers. But the U.S. General Accounting Office has found that "federal supply schedule prices represent the best publicly available information of the prices that pharmaceutical makers charge their most favored customers."⁽²⁾

Because the most favored customer/best federal price does not include a pharmacy dispensing fee, an average fee was added. Large purchasers like the federal and state governments and HMOs negotiate a fixed dispensing fee per prescription. Here are some sample fixed dispensing fees:

• HMOs: Specific fees are proprietary information, but industry observers indicate the fee is $4.00 or less per prescription paid to participating pharmacies.⁽³⁾
  
• Chicago: The federal government requires states to establish "a reasonable dispensing fee" for the pharmacies participating in the Medicaid prescription drug program.⁽⁴⁾ The Chicago dispensing fee is $3.63/$3.94 per prescription.⁽⁵⁾

Based upon the best evidence, a $4.00 dispensing fee was added to the most favored customer/best federal price for each prescription.

Pharmacies

Twenty-three retail pharmacies in Chicago were selected randomly from the phone book Yellow Pages.

Survey Administration, Quality Control, and Data Management

A draft survey instrument and written instructions to solicit surveys were developed. A pretest was administered to five retail pharmacists. The results were evaluated and the instrument, instructions, and training curriculum were modified to improve the administration of the survey questionnaire.

The final standard survey instrument was designed. Revised instructional materials, including an interviewing script explaining the study, were prepared. Interviewers were recruited and received training on interviewing techniques, the questionnaire, and a script. Interviewers were supervised by staff of Metro Seniors in Action. Pharmacists in twenty-three drug stores in Chicago were interviewed with the survey instrument and script during weekday morning and afternoon hours by the volunteer members of Metro Seniors in Action. A condition of the interview was anonymity for individual respondents. Results were analyzed by Public Citizen staff. Questionnaires were dated, coded for anonymity, and entered into a standard statistical spreadsheet program. Figures were rounded to the nearest dollar.

Part Two
Skyrocketing Prescription Drug Costs Hit Seniors Hard

Prescription drugs are the fastest growing health care expenditure in the United States. The number of retail prescriptions grew 8% from 1998 to 1999, rising to almost three billion prescriptions annually.⁽⁶⁾ But spending for prescription drugs is rising even faster. Americans were expected to spend more than $121 billion for retail pharmaceutical drugs in 1999, an increase of 18% over 1998.⁽⁷⁾ Prescription drugs rank behind only hospital and physician costs among all health care expenditures.⁽⁸⁾

Prescription drug spending is projected to rise more than twice as fast as all other health care costs this year.⁽⁹⁾ The federal Health Care Financing Administration (HCFA) forecasts a 138% increase in total drug spending over the next ten years.⁽¹⁰⁾ This rate of increase would be almost four times the projected growth in the Consumer Price Index, which determines increases in Social Security payments, the lifeblood of many seniors.⁽¹¹⁾

Medicare Does Not Cover the Prescription Drugs Seniors Rely On

Medicare recipients are especially dependent on prescription drugs in order to maintain good health. Senior citizens are 12% of the population but account for about one-third of all prescription drug spending.⁽¹²⁾ The average Medicare beneficiary fills eighteen prescriptions a year.⁽¹³⁾ Moreover, 80% of retired Americans take at least one prescribed drug every day, spending on average $942 a year.⁽¹⁴⁾

About 39 million Americans have most of their health care costs paid for by Medicare because they are over the age of 65 or disabled. Yet, Medicare offers almost no outpatient prescription drug coverage. Medicare only covers prescription drugs used in a hospital or nursing home, immunosuppressive drugs, erythropoeitin, oral anti-cancer drugs, hemophilia clotting factors, and some vaccines. Generally, any drug that can be self administered is not covered.

One in Three Seniors Has No Drug Coverage; Millions More Need Help

Most Medicare recipients have few options to reduce or contain their prescription costs. At least one in three, or more than 14 million beneficiaries, has no drug insurance coverage at all.⁽¹⁵⁾ They must pay all costs out-of-pocket.
Another 24% of retirees nationwide are covered through employer group plans. But the number of firms offering retiree health coverage has dropped from 40% to 30% in the past four years.⁽¹⁶⁾ And many of these retirees are still at risk since employers are capping prescription drug coverage, charging higher deductibles, and requiring co-payments of as much as $30 per prescription.

About 8% of U.S. seniors purchase expensive Medigap insurance policies, which provide inadequate prescription drug coverage and increase premiums with age. Almost all of the seniors who have purchased Medigap drug coverage are enrolled in two plans with an average annual premium of $1,080, with coverage capped at $1,250 a year, a 50% co-pay and a $250 annual deductible.⁽¹⁷⁾

Medicaid, the Department of Veterans Affairs, and other public programs provide prescription drug coverage for 17% of beneficiaries, including many of the poorest or most medically needy beneficiaries.

Nationally about one out of six seniors, or 17%, has coverage through Medicare HMOs. Many participants were recruited by initial offers of free prescription drug coverage, but according to the Health Care Financing Administration, all HMOs will charge co-pays next year, and 86% of HMOs will cap prescription drug coverage in 2000.⁽¹⁸⁾ Almost 60% of all plans will cap coverage below $1,000 and 32% will have a $500 or lower cap. HCFA also reports that HMO co-payments for brand name drugs will increase by 2l% and generic co-pays will increase 8% next year. Meanwhile, Medicare HMOs will have dumped more than 1.5 million seniors from coverage between 1999 and 2001.⁽¹⁹⁾

This patchwork of prescription drug coverage leaves three out of four Medicare beneficiaries without decent, dependable coverage for prescription drugs. If recent trends continue, their drug coverage will continue to erode.

Elderly Struggle with Rising Out-of-Pocket Costs for Drugs

Senior citizens pay on average almost 20% of their income in out-of-pocket health care costs.⁽²⁰⁾ Medicare beneficiaries pay about half of the cost of their prescription drugs out-of-pocket, while the population as a whole pays just one-third of their total drug costs out-of-pocket. Those with Medigap coverage pay on average 80% of their drug costs out-of-pocket.⁽²¹⁾

Senior citizens need pharmaceutical coverage because they use more drugs than any other age group. But having retired on fixed incomes, too many older adults cannot afford to pay for the prescription drugs they need to stay alive and well.

Pharmaceutical Companies Profit Handsomely from Price Discrimination

The Most Profitable Industry in America

Prescription drug company earnings are skyrocketing along with drug prices. Pharmaceutical manufacturers are the most profitable industry in America - and have been for a long time.

• The prescription drug industry ranked most profitable among 41 industries in 1999, as measured by rates of return on revenue, equity, and assets, according to Fortune Magazine. The profit rate was an extraordinary 36% for return on equity.⁽²²⁾
  
• Pharmaceutical makers rank as the most profitable industry for the past ten years and are consistently among the top two most profitable industries for the past thirty years.⁽²³⁾
  
• In the 1990s, the median profit rate for prescription drug makers was two-and-a-quarter times that of other Fortune 500 corporations.⁽²⁴⁾
  
• CEOs of the top twelve prescription drug makers averaged roughly $9 million each in salary last year, and doubled their compensation by receiving an average of more than $9 million apiece in stock option grants. Together these twelve CEOs held more than $840 million in stock options.⁽²⁵⁾
  

Source:

Public Citizen update of Stephen W. Schondelmeyer calculation, PRIME Institute, University of Minnesota based on data found in Fortune Magazine, 1958 to 1999; Fortune 500 (http://www.pathfinder.com/fortune)

Recent press reports reveal that earnings and profits for the manufacturers of the top nine drugs used by seniors continued to increase at double digit rates for the third quarter of 1999. Sales of Warner Lambert's anti-cholesterol medication Lipitor increased by more than two-thirds between the second and third quarters, from $570 million to $960 million, driving company profits up 38 percent over a year earlier.⁽²⁶⁾ Pfizer reported third quarter earnings up 36% over a year earlier, fueled by strong sales of its top drugs, including Norvasc (the company's top selling drug) and Zoloft (its second highest seller).⁽²⁷⁾ "Over the past decade, Merck...has led the industry with $26 billion in sales; names like Zocor, Pepcid and Vasotec line America's medicine cabinets."⁽²⁸⁾ "Abbott is profiting from the ulcer drug Prevacid...[in the third quarter]."⁽²⁹⁾

Foreign Consumers Pay Much Less for U.S.-Made Drugs than U.S. Consumers

U.S. pharmaceutical manufacturers charge lower prices overseas for U.S.-made prescription drugs than they charge American consumers. American seniors can cross the border to Canada or Mexico and purchase American-made drugs for 25% to 50% less than at home.⁽³⁰⁾ The contrast is even greater with other industrial countries: on average, the Swedish pay 68%, the British 65%, the French 57%, and the Italians only 51% of the prices paid by Americans for the same prescription drugs.⁽³¹⁾ Because their governments negotiate fair prices with American drug makers, foreign consumers pay far less than Americans and still benefit from our research and development.

U.S. Drug Industry Pays Much Less in Taxes than Other Industries

While the prescription drug industry is price gouging everyone who lacks prescription drug coverage, U.S. pharmaceutical manufacturers are also shortchanging the taxpayers, according to an analysis prepared by the Congressional Research Service for the minority staff of the Joint Economic Committee. Drug makers paid only 59% of the average federal tax rate paid by other major industries from 1993-1996. Overall, the pharmaceutical industry paid an effective U.S. tax rate of 16.2%, whereas companies in all other major industries paid 27.3%. The study also found that after-tax profits for the drug industry were more than three times greater than other major industries: 17% compared to 5%.⁽³²⁾

Research and Development Myths and Facts

Pharmaceutical manufacturers deny that they practice price discrimination. Instead, they justify high prices as the cost for research and development. Their industry trade association, Pharmaceutical Research and Manufacturers of America or PhRMA, argues research would decrease and production of wonder drugs would decline if consumers paid lower prices. This scare tactic seeks to obscure the fact that R&D is a much lower priority than profits for this industry.

Table 2 on the next page presents the record of the twelve largest U.S. prescription drug makers, which account for more than one-third of industry revenues. Their 1999 annual reports were reviewed to examine how their revenues were allocated between profits and research and development.⁽³³⁾ The findings reveal the hypocrisy of the pharmaceutical industry with regard to R&D.

Table 2: 1999 Profits vs. R&D: Twelve Largest U.S. Pharmaceutical Companies

* American Home Products recorded a litigation charge of $4.8 billion in the third quarter of 1999 to provide for expected payments in a nationwide class action settlement brought against AHP regarding the use of the antiobesity products Redux and Pondimin (also known as Fen-Phen).

(Source: Fortune Magazine's top twelve pharmaceutical companies ranked by sales, in this chart in declining order by ratio of net income to R&D. Company figures from 1999 Annual Reports, Table of Consolidated Statement of Earnings.)

Four of the top twelve companies put two to three times as much revenue into profits as went into R&D in 1999. Ten of the twelve companies had higher profits (net income) than research expenditures. The median R&D expenditures for the twelve largest drug companies was 44% higher than the median profits.

About Public Citizen and Metro Seniors in Action

Public Citizen is a 150,000 member national non-profit, non-partisan public interest group based in Washington, D.C. Public Citizen has 5,651 members and supporters in Illinois. Since its founding by Ralph Nader in 1971, Public Citizen has fought for consumer rights, government and corporate accountability, campaign finance reform, a clean environment, and health and safety protection through lobbying, public education, research, and media outreach. Public Citizen has launched the Campaign for Affordable Prescriptions to educate the public and mobilize grassroots support for fair pharmaceutical prices. This report was prepared by Congress Watch, a division of Public Citizen.

Metro Seniors in Action is a citywide, not-for-profit advocacy organization dedicated to improving the lives of seniors in Chicago. Begun in 1974 by a small group of senior citizens interested in building an organization that would truly represent the concerns of the low- and moderate-income elderly, Metro Seniors in Action's mission is to empower seniors to fight for their rights. This grassroots federation of senior clubs was incorporated in 1978 and today Metro Seniors in Action is the largest and most diverse federation of senior citizens' organizations in Chicago with a membership base of 10,000 individuals and 154 affiliate senior clubs. Recently, Metro Seniors in Action has won numerous victories including making the CTA more accessible for seniors, compelling the Chicago City Council to enact the Managed Care Consumer Protection Ordinance, and persuading the City of Chicago to formulate a Heat Emergency Plan, which is credited with saving many lives. Metro Seniors in Action is dedicated to fighting for quality, low-cost health care for all.

Notes

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1. The average differential for all ten drugs between the retail price for equivalent dosages paid by seniors and that paid by most favored customers is shown in order to provide a composite overview of the results of this survey. It does not reflect any one individual's experience, since one person would not be taking all of the drugs.

2. Correspondence by William J. Scanlon, Director, Health Financing and Public Health Section, U.S. General Accounting Office, April 21, 1999.

3. Public Citizen interviews with independent pharmacists, pharmacy association staff, and

Congressional staff, August 1999.

4. Health Care Financing Administration (HCFA), Department of Health and Human Services

(DHHS), 42CFR447.331(b)(1).

5. National Association of Chain Drug Stores, Medicaid Pharmacy Reimbursement,

www.nacds.org, August 1999.

6.

7. Ibid.

8. HCFA, DHHS, National Health Expenditures Projections, July 19, 1999, www.hcfa.gov/stats/NHE-Proj/proj1998.

9. Ibid.

10. Ibid.

11. Bureau of Labor Statistics, July 1999, http://stats.bls.gov/news.release/cpi.nws.htm.

12. Stephen Long, Prescription Drugs and the Elderly: Issues and Options, Health Affairs,

Spring II 1994, Vol. 13, No. 2, page 159.

13. Margaret Davis, et al, Prescription Drug Coverage, Utilization, and Spending Among Medicare Beneficiaries. Health Affairs, January-February 1999, Vol. 18, No. 1, pages 231-243.

14. Michael E. Gluck, A Medicare Prescription Drug Benefit, National Academy of Social Insurance Brief, April 1999.

15. M. Davis, op. cit.

16. National Economic Council/Domestic Policy Council, Executive Office of the President, Disturbing Trends and Dangerous Trends: Facts About Medicare Beneficiaries and Prescription Drug Coverage, July 22, 1999.

17. AARP, Selecting Medicare Supplemental Insurance, May 1999.

18. HCFA, DHHS, Medicare+Choice: Changes for the Year 2000, September 1999.

19. HCFA, DHHS, Factsheet, July 15, 1999; Robert Pear, Estimate of Ousters by H.M.O.'s is Raised, New York Times, July 25, 2000.

20. M. Davis, op. cit.

21. AARP Public Policy Institute and the Lewin Group, Out-of-Pocket Health Spending by Medicare Beneficiaries Age 65 and Older: 1997 Projections, December 1997.

22. Fortune Magazine, 2000 Fortune 500, April 2000. www.pathfinder.com/fortune/fortune500/medians6.html.

23. Alan Sager and Deborah Socolar, Affordable Medications for All, Access and Affordability Monitoring Project, Boston University School of Public Health, www.house.gov/berry/prescriptiondrugs/studies.htm. Comparison is based upon median rate of profit for return on equity.

24. Ibid.

25. AFL-CIO, CEO Pay Watch, June 2000, www.alfcio.org/cqi-bin/aflcio.pl.

26. Oliver Wagg, "U.S. Drug Sector Q3 EPS Growth in Mid-teen Pct Range," AFP-Extel News Limited, October 18, 1999; Kerry Dooley, "Warner Lambert Profit Rises 38% Cholesterol Drug Sales Set Pace," Bloomberg News, October 19, 1999.

27. "Pfizer sees FY 1999 EPS at 'high end' of 80-83 cent range," AFP-Extel News Limited, October 19, 1999.

28. Lisa Reilly Cullen Ranking, "Merck Looks to Its Next Big Pill," Money, February 1999.

29. "Abbott Posts 10% Rise in 3d-Quarter Profit," New York Times, October 12, 1999, Section C, page 2.

30. David Cantor, Prescription Drug Price Comparisons: The United States, Canada, and Mexico, Congressional Research Service, January 23, 1998.

31. Canada's Patented Medicine Prices Review Board, Trends in Patented Drug Prices, www.pmprb-cepme.gc.ca/rm-pat-e.pdf, September 1998.

32. "U.S. Pharmaceutical Industry Pays Less in Domestic Taxes than All Other Industries, Analysis Finds," News Release of Rep. Pete Stark (D-Calif.), Ranking Minority Member of the Joint Economic Committee, U.S. Congress, December 16, 1999.

33. 1999 Annual Reports of top twelve pharmaceutical manufacturers, Table of Consolidated Statements of Earnings.