Healthy Skepticism Library item: 250

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Novelli , W. D
Letter to Pharmaceutical CEOs
2004 Mar 16

Full text:

Dear Opinion Leader:

The Medicare law enacted last year is going to help the majority of beneficiaries and their families – especially those with low incomes and high drug costs – better afford their prescription drugs.

But drug costs are still too high, and much more needs to be done.

Attached is a letter we just sent to the CEOs of the major pharmaceutical companies, asking them to take important, specific steps to contain prices.

The letter to drug company CEOs has also been released to the media, Members of Congress and others, like you, who are concerned about this issue. On Wednesday, March 10th, we will be running full page ads – essentially excerpts from the letter – in the New York Times, Washington Post, LA Times and USA Today, The Hill and Roll Call. Our ad will also appear in major African American and Hispanic newspapers.

The week of March 8, we began airing a new TV ad supporting the safe importation of prescription drugs from Canada and the need for government authority to negotiate for lower prices in the event the competitive private purchasing system does not produce the anticipated cost savings. Later this month, we will also air a TV ad promoting our new consumer education booklet which is available in both English and Spanish, and has already been distributed to more than 200,000 people.

This booklet explains the benefits of the new law in plain language and shows people how it can help them.

Our challenge to the drug industry is another step in our recently announced campaign to lower the cost of drugs. We are increasing our efforts at the state level and in Washington to educate, advocate and litigate, if necessary, to make prescription drugs more affordable. We want to give consumers the information they need so that they can make wise choices about the cost and efficacy of the medicines they take.

AARP and many others are doing their part. We believe if the drug industry does its part, we can all help improve the health and financial security of millions of people.

Sincerely, William D. Novelli

The following letter was sent today, March 8, 2004, by AARP CEO Bill Novelli to the CEO or Chairman of these pharmaceutical companies.

TO: Abbott Laboratories

Allergan, Inc.

AstraZeneca, LP

Aventis

Bayer Corporation, Pharmaceuticals Division

Bristol-Myers Squibb Company World Wide Medicine Group

Eli Lilly and Company

GlaxoSmithKline

Hoffmann-La Roche Inc.

Johnson & Johnson

Merck & Co., Inc.

Novartis Pharmaceuticals Corporation

Pfizer Inc.

Purdue Pharma L.P.

Schering-Plough Corporation

Wyeth

Dear Pharmaceutical CEO:

The enactment into law of Medicare prescription drug coverage last year will benefit millions of older Americans and their families. While the majority of Medicare beneficiaries now will receive help with their drug costs, those with low incomes and high expenses will especially benefit.

But as we all know, the problem of high drug prices is still a serious issue in the United States. Prices rose last year faster than the cost of living. Too many people cannot afford the drugs they need, and as many studies show, the result is very substantial non-compliance with physicians’ recommendations. In addition, many people do not use generics despite their comparable effectiveness and lower cost.

Containing drug costs is critical to the health security of older and disabled Americans and to the success of the Medicare prescription drug benefit.

As indicated in survey after survey, and in the letters we receive daily from our members, Americans of all ages are seriously concerned about their inability to afford the drugs they need.

We, as did many others, worked hard for the passage of the Medicare law last year. But while 2003 was the year of enactment, 2004 must be the year of affordability.

AARP and our 35 million members are the first to acknowledge the important role of pharmaceutical research and innovation in helping us live longer, healthier lives. As we have said before, we will work with you to sustain that progress. However, it is important to acknowledge that the pharmaceutical industry will see a significant increase in utilization of their drug products as a result of the new Medicare law.

This increased sales volume should allow for additional price efficiencies and thus lower prices for consumers.

We are pleased that many in the industry are already working to ensure that people do benefit from the new Medicare law. We are particularly pleased by the efforts of some companies to enroll low income beneficiaries in pharmaceutical assistance programs, including pledges to provide additional assistance for Medicare beneficiaries who use up their $600 annual benefit. These are helpful steps, but much more must be done.

First, we are calling on each pharmaceutical company to limit price increases to no greater than the level of inflation for current drug products. We also urge you to constrain the prices of new drugs, and to use your influence to curtail greater mark-ups throughout the distribution chain to retail. We have begun to monitor prices for specific drugs at regular intervals and we will report findings – both favorable and unfavorable-to our members and to the public.

Second, it is time for the industry to cooperate with secure, reasonable drug importation legislation, subject to proper oversight of the FDA (with additional authority and resources) and with strict procedures to ensure safety. This is an issue of top interest and concern to our members and to the American public. In a recent AP poll, nearly two-thirds of those surveyed said the government should make it easier to buy drugs from Canada or other countries. Our own surveys show similar results. Legalizing importation for individuals will help many Americans afford their drugs, meet public concerns about fairness and forestall more far-reaching importation.

American consumers, who fund much of your research and development, find it unacceptable that they must buy illegally from other countries to be able to afford the drugs they need. While importation is not a panacea, or even a long-term solution, for millions of consumers it is currently a necessity. Until we can bring costs in this country more in line with what people can afford, we ask that you join us in this effort and, at the very least, do nothing to choke off this vital lifeline.

Third, we ask your active support for federal and state funding to support clinically based, comparative effectiveness research that will permit objective, scientific comparisons of specific drugs in the same therapeutic class. This is truly the information needed to make the market work. Such research will enable payers, physicians, consumers and their families to obtain the information needed to choose the most appropriate drugs at the lowest prices.

Fourth, while the new Medicare law is designed to achieve substantial discounts through negotiations by the private plans, it is also prudent to provide the Secretary of HHS with appropriate negotiating authority in the event that the competitive private purchasing system does not produce the anticipated cost savings. Therefore, we are asking you to not oppose legislation to make this possible.

In addition, we ask you to support several other important areas to make drugs more affordable and to ensure a system of fair competition within Medicare as well as in other parts of the health care system. These include:

• Requiring disclosure of pricing information by pharmaceutical benefits managers to their payer clients to assure that those enrolled in the program receive full advantage of negotiated discounts and rebates. Such pricing information may be proprietary and therefore we are not suggesting that this information be released widely.

• Reforming direct-to-consumer drug advertising by requiring that companies provide information about the risks, side-effects, and proven effectiveness more clearly and as prominently as information about benefits.

• Support for additional steps to speed generics to market once the patent has expired for branded products.

• Support for appropriate limits on detailing to physicians, including gifts, sponsorship of educational meetings and other marketing restrictions consistent with the ethical guidelines of the American Medical Association.

This will be a critical year for dealing with all these issues, as well as for enrolling older Americans in the new Medicare discount card and informing the public about enrollment choices to begin in 2006. We will be active in all these areas, and will be working with others to provide consumers with the information and education they need.

All of the items in this letter are important to contain costs. But the most visible signal of your support for America’s seniors is to promptly pledge to hold your prescription drug price increases to no more than the rise in inflation. This bold step, coupled with your support for the other initiatives outlined in this letter, will help make a major difference in the affordability of drugs for American consumers. Your efforts have the potential to improve the health and financial security of millions of people.

We are prepared to work with you as we continue to educate and advocate on behalf of our members and all older Americans. We look forward to your response and to next steps in this critical endeavor.

Sincerely, William D. Novelli