PRESCRIPTION DRUG COSTS

BACKGROUND -- Prescription drug prices are a key factor in the escalating cost of health care in our state.  Meanwhile, the number of Americans with insurance covering prescription drugs is declining.  These uninsured families are paying far more for prescription drugs than their insured neighbors.

The pharmaceutical industry has fallen under mounting scrutiny for its role in the crisis.  With drug costs one of the fastest growing components of health care costs. Spending was $188.5 billion in 2004, over 4.5 times more than the $40.3 billion spent in 1990, according to a June 2006 Kaiser Family Foundation study. Driving that spending is higher drug prices, which have increased an average of 8.3% a year from 1994 to 2004, more than triple the average annual inflation rate of 2.5%.

The problem is fueling the larger health care cost crisis hitting families, employers, and state and local governments across the nation.

Why the skyrocketing costs?  Good question, especially given the fact that the very same drugs are often sold for less than half the U.S. price in Canada and Mexico.  The industry claims the high costs of research and development of innovative new drugs is responsible for the rising costs, but the evidence doesn’t bear that out.  In fact, the New England Journal of Medicine reported that "much of the case of the pharmaceutical industry is exaggerated or misleading, and some of it is simply false."

LABOR’S POSITION -- The Washington State Labor Council is part of a coalition of consumer, labor, faith-based, senior and community organizations that have come together seeking solutions to lower prescription drug prices.

In 2003, the WSLC supported legislation consolidating state purchasing of prescription drugs. The measure created a preferred drug list enabling the state to negotiate lower prices for bulk purchases of these drugs. Building on the success of that program, which saved the state an estimated $15 million over the next two years, the Legislature expanded the drug purchasing consortium in 2005 to gain even greater leverage in negotiating lower drug prices. That has resulted in $46 million in savings over the past two years, and Gov. Gregoire predicts another $21 million will be saved next year.

In addition, the WSLC supports legislation authorizing the re-importation of prescription drugs from Canada and/or other developed nations that pay far less for prescription drugs. Illinois and Minnesota have already passed such drug re-importation laws.

2003 -- The legislature approves and the governor signs prescription drug purchasing reform that calls for consolidated purchasing by all state entities, the creation of an evidence-based preferred drug list, and a safety valve allowing the prescribing provider to note "prescribed as written" for drugs not on the preferred list.

2004 -- HB 2469 would have allowed the state to make drug purchases from Canada. It passed the House, but died in the Senate.

2005 -- SB 5471 expanded the state's drug-purchasing consortium to include -- on a voluntary basis -- local governments, private entities, labor organizations, and uninsured or underinsured individuals. It passed, and was signed into law.

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