Healthy Skepticism Library item: 5915
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: media release
Erskine L.
Merck, Pfizer, Wyeth making billions in excess profits through Medicare drug plan
Center for Economic and Policy Research 2006 Aug 15
http://www.cepr.net/pressreleases/2006_08_15.htm
Full text:
Press Release
MERCK, PFIZER, WYETH MAKING BILLIONS IN EXCESS PROFITS
THROUGH MEDICARE DRUG PLAN
Contact: Lynn Erskine, 202-293-5380 ×115
For Immediate Release: August 15, 2006
Washington, DC: Pharmaceutical companies are making billions in excess profits under the new Medicare drug benefit, according to a report by the Center for Economic and Policy Research. In the first year of the Medicare Part D program, Pfizer will make $1.2 billion in excess profits on Lipitor and $585 million on Zoloft; Wyeth will make nearly $1 billion on Protonix; and Merck will make $1.6 billion on Zocor.
The report, “The Origins of the Doughnut Hole: Excess Profits on Prescription Drugs,” by economist Dean Baker, calculated the difference between the average cost of 20 common drugs used by seniors and the cost when obtained through the Veterans Administration. It found excess profits totaling more than $7 billion in the first year of the program. The study also calculated prices for prescription drugs such as Actonel, Aricept, Celebrex, Fosamax, Nexium, Norvasc, Plavix, Prevacid, Toprol XL, and Xalatan. To read the report, see: http://www.cepr.net/publications/part_d_drug_profits_2006_08.pdf
Thousands of drugs cost more than necessary under the Medicare drug plan because Congress prohibited Medicare from negotiating drug prices directly with the pharmaceutical industry, as is done by the Veterans Administration. In the case of many drugs, the prices paid by insurers participating in the plan are more than twice as high as the prices paid by the Veterans Administration.
Millions of seniors and disabled Americans enrolled in Medicare Part D drug plans are discovering the “doughnut hole” – the $2,850 gap placed into the plan in order to save the government money. The Center for Economic and Policy Research has pointed out that this gap was only necessary because the plan’s overall design added significant costs and complexity.
“The excess profits from just a small number of drugs account for a very large portion of the doughnut hole,” said Baker. “The excess profits for the drug industry as a whole will be close to $50 billion in the first full year of Medicare drug benefit program. This is more than twice the size of the doughnut hole.”
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The Center for Economic and Policy Research is an independent, nonpartisan think tank that was established to promote democratic debate on the most important economic and social issues that affect people’s lives. CEPR’s Advisory Board of Economists includes Nobel Laureate economists Robert Solow and Joseph Stiglitz, and Richard Freeman, Professor of Economics at Harvard University.
1611 Connecticut Ave., NW Suite 400 Washington, DC 20009
Tel: 202-293-5380 | Fax: 202-588-1356 | www.cepr.net
