Affordable Prescriptions for the Elderly

Many clinicians have ordered a lipid panel for an elderly patient with diabetes and coronary artery disease, only to find that the statin drug prescribed 6 weeks ago has failed to lower the patient's low-density lipoprotein cholesterol level. "Are you taking your cholesterol pill every day?" the physician is likely to ask. "I hate to tell you, doc, but I just couldn't afford that pill. I never even bought it."

Recent studies indicate that lack of prescription drug coverage for Medicare beneficiaries is associated with lower use of essential medications and may lead to higher rates of adverse outcomes such as hospitalization and nursing home placement.^{1 - 2} These studies comprise a subset of the medical literature demonstrating that imposing out-of-pocket costs on patients reduces use of medical services, especially for low-income persons, with worsening of clinical processes or outcomes. In the Rand Health Insurance Experiment, patients contributing to the cost of their care had fewer ambulatory visits, fewer Papanicolaou tests, and higher diastolic blood pressures (for people with hypertension) compared with the free-care group, which had prescription drug coverage.³ In another survey, 37% of patients with uncontrolled hypertension reported difficulty paying for their medications compared with 16% of those whose blood pressure was controlled; the investigators concluded that pharmacy costs contributed to inadequate hypertension control.⁴

In this issue of THE JOURNAL, Federman et al⁵ add important findings to this literature, showing that for Medicare beneficiaries with coronary heart disease, only 4% of those without drug coverage—compared with 27% with adequate coverage—used high-priced statin drugs to lower cholesterol in 1997. The association was less marked for lower-cost β-blockers and nitrates, suggesting that the price of a drug was related to its use in this population. The implication is that elderly patients with coronary heart disease who lack coverage for high-cost medications are at greater risk for myocardial infarction and death.

This article appears at a critical time for national health care policy. Serious concerns and anger about drug costs are pervasive among elderly patients. Whereas 73% of the 41 million Medicare beneficiaries have some drug coverage, only 39% have reliable coverage, since Medicare managed care and Medigap drug plans have deteriorated in the past few years.⁶ Among Medicare beneficiaries, 27% will spend more than $1000 out-of-pocket for medications in 2001.⁷ The average cost per prescription for an elderly person increased from $28 in 1992 to $42 in 2000 and is expected to reach $73 by 2010.⁸

However, the currently elected representatives may have painted themselves into a corner on the Medicare prescription drug issue. The budget agreement stemming from the recent $1.35 trillion tax cut stipulates that only $300 billion can be spent for Medicare prescription drugs over the next 10 years.⁹ Yet, the Congressional Budget Office projects drug expenditures for elderly patients at $1.3 trillion in the coming decade.⁹ Prescription drug coverage will pay for only 23% of Medicare drug costs unless beneficiaries are charged substantial premiums to increase the pool of available funds. As of August 2001, some Republican and Democratic drug coverage proposals contained a $636 yearly premium that would double by 2011.⁹ These are devastatingly high sums for elderly persons, whose median income in 1999 was only $14 425.¹⁰ Even with high premiums, these congressional proposals will still require large co-payments. Unless the budget agreement is modified, the $300 billion 10-year limit has sabotaged the chances of a Medicare drug benefit that makes prescriptions affordable to all elderly persons. The only hope for reasonable Medicare drug coverage is a reduction in the cost of medications.

From 1998 to 1999, national expenditures for prescription drugs increased 16.9% compared with a 5.6% growth in all other health expenditures.¹¹ From 1999 to 2000, drug expenditures increased another 18.8%.¹² Three factors have played major roles in the increase in pharmaceutical expenditures from 1993 to 1998: 18% of the increase resulted from higher prices for drugs; 43% from the increasing number of prescriptions written; and 39% from newer, higher-priced drugs replacing older, less-expensive drugs.¹³

Price Increases. The pharmaceutical industry claims that high drug prices are needed to finance research and development of new products, each of which costs an average of $500 million to develop.¹⁴ While this argument has some merit, it does not tell the entire story. For years, pharmaceutical manufacturing has been the most profitable of all industries, earning a 1999 median net profit after taxes equal to 19% of revenues, compared with 5% for all Fortune 500 firms.¹³ In 1998, the 10 largest drug companies spent only 11.1% of their sales revenues on research and development, while 33.5% went to marketing and administration, and 24.3% to pretax profits.¹³ Moreover, not all research and development creates therapeutic advances. Former Food and Drug Administration (FDA) Director David Kessler stated that from 1989 to 1993, the FDA approved 127 new drugs but "only a minority offered a clear clinical advantage over existing therapies."¹⁵

Increasing Number of Prescriptions Written. Not every prescription results in better clinical outcomes. Brook¹⁶ estimated that 40% of prescriptions are unnecessary. Rothschild et al¹⁷ concluded that 8% to 24% of ambulatory patients receive prescription drugs that are inappropriate or contraindicated. Fatal medication errors among outpatients doubled between 1983 and 1993.¹⁸ The $14 billion spent in 1999 on marketing, including $12 billion to physicians and $2 billion in direct-to-consumer advertising, contributes to overprescribing.¹⁴ During the past 4 years, the FDA has reprimanded drug companies more than 75 times for making misleading claims in direct-to-consumer advertising commercials.¹⁹ Pharmaceutical promotion to physicians results in increased prescription rates for the sponsor's medications and contributes to nonrational prescribing practices.²⁰

High-Priced Drugs Replacing Less Expensive Drugs. The pharmaceutical industry sustains high drug prices through patent protection. Patents are reasonable to allow companies to achieve a return on their research investments. However, some drug companies have used legal tactics to delay patent expirations on brand name products or have paid generic drug manufacturers not to market generic alternatives.^{21 - 22}

Drugs advertised on television are often high-cost substitutes for lower-priced, equally effective generic therapies. Twenty-five of the most heavily advertised drugs accounted for 41% of the increase in drug spending in 1999.¹⁹ Three quarters of patients who requested their physician to prescribe a drug that they had seen on a television advertisement received the prescription that they requested.²³

The pharmaceutical industry has major strengths and serious weaknesses. While it develops new products that control and cure previously untreatable illnesses, it also promotes a system of expensive brand-name drugs that many patients, especially elderly patients, cannot afford.

Legislation of a Medicare prescription drug program, enabling all beneficiaries to afford appropriate medications, is estimated to cost $1.3 trillion over the next 10 years. This figure must be reduced. This goal can be accomplished by using a well-established market mechanism: purchasing power. Managed care organizations have been negotiating drug discounts for years. The federal government is also a purchaser in the health care marketplace and can negotiate similar discounts on behalf of all 41 million Medicare beneficiaries. Currently, through the federal supply schedule for pharmaceuticals, federal agencies purchase prescription drugs at discounts reaching 40% to 60% of market price.²⁴ Congress can extend the federal supply schedule to Medicare. If, in contrast, Congress channels a Medicare drug plan through the private sector, it will guarantee high and rising drug prices and a paltry drug benefit for elderly patients.

The drug industry's own internal logic, ie, its need for new brand-name products with patent protection, ensures that research and development will continue even if drug prices decrease. If needed, vast sums in marketing budgets could be redirected toward research. Physicians can assist companies in cutting marketing budgets by refusing to see pharmaceutical sales representatives. A number of medical practices have done just that, resulting in lowered drug costs.²⁵

The drug industry makes many important products that reduce morbidity and mortality, and improve quality of life for millions of patients. To have an even greater impact on improving health, the pharmaceutical industry now needs to support a publicly run Medicare drug proposal granting the government economic clout to reduce drug prices. Only then will all elderly persons truly benefit from those valuable prescription products.