The Boston Sunday Globe
December 12, 1999
How to bring down the cost of prescription drugs
Joseph P. Kennedy II and William F. Weld
As a former US representative and a former governor, we have long been interested in the problem of delivering quality health care to the needy and elderly at a price both they and government can afford.
Though coming from opposite political parties, we are united in supporting a proposal to bring significant financial relief to Bay State consumers for the cost of prescription drugs.
The nonprofit plan, developed by Citizens Energy Corp. and included as a provision in the recently passed state budget, would allow seniors, the uninsured, and such state groups as Medicaid recipients and state employees to purchase drugs at lower cost. This can be done by taking advantage of the fact that a group always has a stronger voice in the marketplace than an individual.
For the past two decades, Citizens Energy has helped to aggregate consumers in order to take advantage of volume discounts on purchases of such essentials as home heating oil, natural gas, and electricity. Over 15 years ago, Citizens helped pioneer group purchasing of pharmaceuticals, in the process managing billions of dollars in prescription savings for millions of Americans.
Since then negotiating volume discounts from drug companies and securing price reductions from pharmacies have become standard practice in the health care industry. These principles lie at the heart of what the state budget plan can do for Massachusetts.
Today, the dual effect of bargaining with the drug companies and pharmacies has resulted in 30 percent to 50 percent reductions in the price of drugs for 4.5 million Massachusetts residents and three-quarters of the US population.
The only people who don’t benefit from these market mechanisms are those who need a break -- the 70 million poor and elderly Americans without prescription drug coverage of any kind. We can make health care more accessible and affordable for those now paying full retail prices.
By pulling together the Bay State’s uninsured residents, Medicaid and Medicare recipients, and state employees into a single buying cooperative, the state budget plan can deliver over 30 percent savings in prescription spending for 1.6 million consumers.
At the same time, millions of taxpayer dollars wall be saved through a number of mechanisms, including a reduction in state health care reimbursements for the uninsured, an expansion of Medicaid savings beyond the current level of federal rebates, and an increase in state employee savings.
All told, the plan will cut at least $20 million from the state budget while enabling the senior citizen who currently spends $2,000 annually on pharmaceuticals to save between $500 and $1,000.
Much attention has been paid in recent policy debates to people like Lena Sanford, a North Cambridge grandmother whose monthly prescription bill of $1,365 exceeds her household income by $160.
Suffering from painful lung and bone disorders, Sanford takes 17 different prescriptions to control her medical conditions. She relies on friends and family to help purchase the medications she needs.
Back in September, she joined a group of senior citizens on a bus bound for Canada, where she purchased three months’ worth of medications for $975. The same batch would have cost $4095 back home.
“What’s the good of prescriptions if I can’t afford them?” she asks. “Sometimes, I just don’t know what I’m going to do.”
Businesses thrive by identifying and capitalizing on market opportunities, including economies of scale in purchasing and production. The Massachusetts budget plan applies the same principle for the benefit of people like Lena Sanford -- the elderly and the working poor.
Negotiating discounts with drug companies and pharmacies on behalf of the most vulnerable in our state is an opportunity to use the marketplace to address an urgent social need, in this case, the impact of skyrocketing drug prices.
Our proposal has received support from both sides of the political aisle, including Governor Paul Cellucci and Senator Mark Montigny, because it marries capitalism with compassion to make life’s basic needs more accessible and affordable.
Here in the health care capital of America, the time has come to make all our citizens benefit from the miracles of modern science. Working together, we can make sure no one in the Commonwealth lacks access to the medications they and their families need.