Mr. Chairman and members of the Committee, thank you for convening this hearing and for providing AARP an opportunity to share our views on the need to address rising drug costs through the safe importation of prescription drugs.
Over five months ago, Congress enacted some sweeping changes to Medicare – including long-overdue prescription drug coverage. We believe that the new law, while far from perfect, lays the foundation for affordable Medicare prescription drug coverage upon which will we will build over time. AARP will continue to work with Congress to strengthen and improve the drug benefit and the Medicare program.
The Need for Importation Legislation
The Medicare prescription drug benefit was an important first step. But now more needs to be done to control the rising costs of prescription drugs so that Americans of all ages can afford needed medications. Modern medicine increasingly relies on prescription drug therapies; yet the benefit of these therapies still eludes those Americans who cannot afford to pay escalating drug prices. Between 1998 and 2003, prescription drug prices rose at nearly twice the annual rate of inflation for that same period.
CMS estimates that, in 2003, per capita spending on prescription drugs rose approximately 12 percent, with a similar rate of growth expected for this year. Much of the increase in drug spending is due to higher utilization and the shift from older, lower cost drugs to newer, higher cost drugs. However, rapidly increasing drug prices are a critical component.
High drug prices, combined with the surging older population, are also taking a toll on state budgets and private sector health insurance costs. Medicaid spending on prescription drugs increased at an average annual rate of nearly 20 percent between 1998 and 2001. Until lower priced drugs are available, pressures will continue to squeeze public programs at both the state and federal level. Pressure will continue on the private sector as well, possibly leading to elimination of, or reductions in, employer-provided drug benefits. Further, over 43 million Americans currently have no health insurance coverage. Without access to negotiated prices, these Americans pay among the highest prices for prescription drugs in the world or, worse yet, don't fill prescriptions because they cannot afford to pay for them.
AARP surveys demonstrate that our members consider drug prices exorbitant and the single most significant barrier to obtaining needed medications. Responses to an AARP Bulletin questionnaire last fall showed that our members split pills, skipped doses, asked doctors for free samples, and sold possessions because the costs of needed medications were too expensive. One woman poignantly noted that she begged for the unfinished prescriptions of friends who had died, hoping their left-over drugs would meet her needs.
Americans of all ages need affordable prescription drugs now. Safe importation of prescription drugs from Canada is one way to begin to secure lower priced drugs. Our members question why prices in Canada can be lower, sometimes far lower, than prices in the U.S. It is a national embarrassment that people from all over the world come to the United States to access our advanced medical systems while many of our own citizens need to look outside our borders in order to afford their prescription drugs. But with the same drugs selling, in some cases, at 30 percent and even 50 percent less in Canada and overseas, it is hardly surprising that so many make that choice.