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Rx: Price Controls

Price regulation of prescription drugs is here. That�s not necessarily a bad thing.

Maurice Drouin, who died five years ago, worked at the Baits Mill in Lewiston, Maine, for more than 40 years. His wife, Laurette, who is now 74, worked for a credit union in the same town. While Mr. Drouin was employed, the Baits Mill paid for all his medical expenses. But in 1987, Mr. Drouin was diagnosed with diabetes, suffered a massive heart attack and stroke, and retired.

The pension Mr. Drouin received from the Baits Mill did not provide medical benefits that paid for prescription drugs, nor, given Mr. Drouin�s health, could he afford a supplementary private insurance plan that did. Medicare, the government program that funds health care for the elderly, does not currently pay for outpatient prescription medicines—and Mr. Drouin was a very sick man who needed a lot of medications.

“We saved for our retirement,” Mrs. Drouin told Senator Olympia Snowe (R: Maine) in a town hall meeting in Lewiston this summer. “But it all went for medication.”

For 11 years, the Drouins, who were never very rich, spent between $3,500 and $6,000 a year on drugs. They spent so much that Mrs. Drouin now lives in subsidized housing. As she has aged, she has taken more and more prescribed drugs herself, and now she has run out of money. In the jargon of American health care policy, she is all “spent out.”

Mrs. Drouin is not alone. This summer, when Congress debated adding prescription drug benefits to Medicare, committee members listened to alarming figures recited by grave experts. Legislators heard that almost one-quarter of Americans under the age of 65, and more than one-third of Medicare patients, have no prescription drug benefits. One-fifth of Americans cannot afford to take at least some of the medicines their doctors have prescribed. Among the poor and the elderly, that figure is 40%.1


The United States Foots the Bill

The discrepancy between U.S. prices for brand-name drugs and the costs in other industrialized nations are not just wide—the gap is actually continuing to increase.