Cover Story
Wanted: Prescription for Easing Drug Prices

Rising drug costs are taking dollars out of your paycheck. It's time to elect leaders who can break the impasse.

Like members around the country, Jean and Jim Scheu, retired teachers in Plymouth, Minnesota, regularly buy prescription drugs.

They don't buy them from their local pharmacist, however. The Scheus, members of Education Minnesota-Retired, a merged NEA-AFT affiliate, buy their drugs through a mail-order service operating in Canada.

By ordering from Canada, the Scheus, both 75, spend about $230 for a three-month supply of their medically required drugs. That's about one-third of the cost charged by local pharmacies this side of the border. The discrepancy angers Jean Scheu. "Why should Canadians pay so much less for prescriptions?" she says. "The price should be the same for everybody."

Welcome to the shameful world of prescription drug pricing, where drug companies spend millions to entice doctors to prescribe you the newest brand-name drugs, while many hard-working education employees find their budgets stretched because their health insurance has inadequate drug coverage.

"Across the U.S., health plan sponsors of small, medium, and large size education employee groups are facing hefty insurance premium increases of 20 percent or more for 2003," says NEA staffer Carol Malone. "Prescription drug spending is directly responsible for more than 35 percent of this overall health premium increase."

As a result, health plan sponsors have been shifting a greater portion of the cost of prescription drugs to employees and their covered dependents. As the average cost of a prescription drug has risen from $3 in 1970 to $25 in 1990 to $65 in 2001, members are increasingly being asked to pick up more of the tab.

Drug companies claim that lowering their prices will force them to cut back on research and development. But the industry spends billions protecting its profits, according to the Alliance for Retired Americans, a coalition of more than 2.5 million union retirees. While the after-tax profits of Fortune 500 companies in 2000 averaged 4.9 percent, the after-tax median profits of pharmaceutical companies was a whopping 18.6 percent of revenues. Drug companies in 2000 spent nearly $2.5 billion on direct-to-consumer advertising to convince you to "ask your doctor about" the latest pricey brand-name drug.

All members should be concerned about the escalating costs of prescription drugs, but retirees like the Scheus are particularly hard-hit. The average annual amount each senior spends on drugs has grown from $559 in 1992 to $1,051 in 2002, but one in three lacks coverage for outpatient drugs.

At press time, the U.S. Senate had considered and rejected several different bills to add a prescription drug benefit to Medicare, although it did pass legislation to facilitate the reimportation of drugs from Canada to the United States (which would ease the way to lower prices).

The current impasse on prescription drugs makes it even more important to scrutinize candidates' records this election season to ensure they have constructive ideas for addressing the issue. "During this election, members should support candidates who not only support a prescription drug benefit for Medicare but are also serious about controlling astronomical prescription drug costs," says Malone. "Until the cost of prescription drugs is brought under control, all citizens face the future risk of not being able to afford drugs at a time when they or their families need it most.

--John O'Neil

Pooling for Savings

The NEAFT Partnership is preparing a model to address the high costs of prescription drugs.

Currently, in most states, NEA and AFT members receive their prescription drug benefits through the health plans offered by their school district. As a result, the levels of coverage offered members--and the costs--vary widely.

During the past year, NEA and AFT researched the feasibility of combining NEA and AFT members into statewide or regional "pools" for the purpose of purchasing or administering prescription drug benefits. Pooled purchasing of drug benefits permits tremendous savings and improvements in quality of care.

The NEAFT Partnership has developed a blueprint, available this fall, that member plans can utilize to join forces to secure the lowest possible pricing for prescription drug benefits. The principles of the model:

• Establish a group purchasing initiative joining together plans for greater volume savings than school districts/plans can obtain on their own;
• Transition over time to more effective management of prescription drug benefit use to maximize savings; and
• Gradually move toward standardizing benefit plan designs.

Under the plan, states and regional models would aggregate their purchasing power to negotiate volume discounts. Eventually, they would also offer education programs for members on specific diseases.

Better information for members to make decisions on prescription drug choices. More affordable coverage. Sounds like a prescription for success.

Teachers Get America's Vote of Confidence

You may not make as much as a CEO or a pro baseball player, but your stock has a lot more currency than theirs in the eyes of the American public.

In a recent Gallup Poll, Americans ranked teachers as the most trusted group of people in the country.

And that means they'll listen when educators speak out. This voting season, tell your friends and political leaders what it takes to improve public education. And get out the vote!

Five Minutes a Week for a Better IDEA

As Congress tackles the reauthorization of IDEA, there will be fast-moving developments and a need for educators to send timely messages to members of Congress about the real-world impact of what they are doing. Charlene Christopher, a special educator in Norfolk, Virginia, and a member of the NEA special education cadre, notes that the best and easiest way to make a difference is to become an NEA cyber-lobbyist.

"You'll get weekly updates on what's happening and what needs to be done, and you can check the record of your own Senator or Representative," she says.

"It takes less than five minutes a week."

To sign up for those five-minute contributions to a better federal law, go to www.nea.org/lac, the NEA Website's Legislative Action Center. Click on "Become a cyber-lobbyist."

Even without signing up, you can get information on IDEA and other important education issues at the Legislative Action Center, as well as fill out a questionnaire that will help to guide NEA's efforts during crucial reauthorization battles.