2003-02-19 / Seniors

Spitzer Sues Two Major Drug Makers

By John Toscano

Last week we wrote that Congressmember Joseph Crowley was pleading with a major pharmaceutical manufacturer, GlaxoSmithKlein, to drop plans to cut off a source of low-cost drugs in Canada.

This week, GlaxoSmithKlein (ESK) is again the subject of this column. The company is one of two major drug manufacturers being sued by state Attorney General Eliot Spitzer. The lawsuits charge GSK and Pharmacia allegedly give discounts to doctors and pharmacists who buy their drug products, saving them money on the purchase.

The drug makers then establish a price for the same drug. The federal government and insurance companies operating HMOs use this price to determine how much to reimburse doctors who administer the drug to a Medicare or Medicaid patient.

Hypothetically a doctor may pay $10 for a dosage amount of a drug. He is then reimbursed, $35, so he makes a $25 profit in this case, and possibly another $10 which the patient might pay as a co-payment.

Spitzer says that under this arrangement, doctors and pharmacists all profit at the expense of tax payers whose tax payments cover Medicare and Medicaid programs, and at the expense patients who make co-payments.

Congress is well aware of this system, which is partly responsible for Medicare and Medicaid costs being so high that improvements cannot be made to the programs that could benefit seniors and low-income persons. However, Congress has not acted to reduce reimbursement rates, possibly because the pharmaceutical industry spends millions of dollars lobbying Washington lawmakers.

In the New York state suits, the drug companies are charged with consumer fraud, making false statements to government health plans when they set the drug prices for reimbursement purposes and commercial bribery for trying to influence doctors’ decisions.

Meanwhile, getting back Crowley’s plea to GSK as set forth last week, the company this week took out a full page ad in the New York Times which says, "You don’t have to go to Canada for prescription savings. You can still go right to GSK."

It seems GSK has a new program to give certain people "30 percent to 40 percent savings" on GSK medicines if they use the Orange Card, which GSK issues.

The Orange Card is available to Medicare members whose annual incomes are at or below $30,000 for a single person or $40,000 for a couple without any prescription drug coverage. For information on the Orange Card call 1-888-ORANGE-6 (1-888-672-6436).

Another full page ad in the Times was taken out by nine American and Canadian organizations "who work to keep affordable alternative-sourced drugs available as a safe, reliable and low-cost option for all Americans."

Among those organizations are the New York State Wide Senior Action Council, several mail order pharmacies and several senior advocacy groups based in other states. The ad states that GSK has stopped providing drugs to Canadian pharmacies and wholesalers who supply American seniors with affordable, high-quality medications.

"If Glaxo gets its way," the ad warns, "all drugmakers will likely follow its lead and eventually strip seniors of their well-established right to access affordable drugs from alternative sources."

The ad also urges seniors to contact their representatives in Washington or call Glaxo at 1-888-825-5249 to complain. It also suggests switching from Glaxo medications to other over-the-counter drug products. The coalition opposing Glaxo can be reached at 1-773-769-1616.

TELEMARKETERS CURBED: Last week, the House passed a bill which had already passed the Senate which approves a program to set up a nationwide "do not call" registry so consumers can avoid calls from telemarketers.

The Federal Trade Commission (FTC) would administer the program, which will cost an estimated $16 million in its first year. The funds have been allotted in a spending package already approved by both houses.

Congressmember Billy Tarzin (R–Louisiana) chairman of the Energy and Commerce committee, said after the 418-to-seven vote favoring the registry, "Most people have experienced it: the annoying ring of the phone just as dinner goes to the table." He said the registry will allow thousands of American consumers to enjoy the peace and quiet of their own home by putting their names on the registry which will tell the marketers, "Do not call." Violations will result in a fine of $11,000 per person.

President George W. Bush is expected to sign the anti-telemarketer bill into law.

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