Senator finds 'excessive greed' Price boosts spur call for more drug price regulation

February 04, 1993|By Los Angeles Times

WASHINGTON -- Leaders of a Senate panel are calling for more federal regulation of drug prices, citing a report that claimed the pharmaceutical industry had increased prices for the most frequently used prescription drugs last year by as much as five times the rate of inflation.

"Greed has become excessive," said Sen. David Pryor, D-Ark., chairman of the Senate Special Committee on Aging. "It's unadulterated and there's a lot of it."

Using statistics in a report by a University of Minnesota professor, Mr. Pryor and Sen. William S. Cohen, R-Maine, the committee's ranking Republican, argued yesterday that many drug manufacturers had broken a 1992 pledge to bring drug costs under control. They proposed stripping manufacturers of tax breaks and taking other steps if that fails to restrain prices.

The senators noted that while the 1991 profit level of the average Fortune 500 company was 3.2 percent, the average profit level of the makers of the top 20 prescribed drugs in the United States was 15.1 percent, a rate that has made them highly attractive to investors.

Mr. Pryor said, however, that some drug manufacturers fulfilled their pledges to keep price increases near the rate of inflation and said, "I want to applaud that."

Drug company officials immediately disputed the findings, alleging that the report's figures are faulty.

Industry officials argued that the report failed to take into account the many discounts and rebates that pharmaceutical makers give such health-care providers as hospitals and health maintenance organizations.

The Senate study, which covered the top 200 prescription drugs, found that prices rose 6.4 percent overall last year. Mr. Pryor and Mr. Cohen said the most disturbing element of their findings is that drugs whose prices rose fastest are those most commonly used by the elderly. Elderly patients covered by Medicare can least afford such price increases, they said, because Medicare does not cover the cost of prescription drugs.

"We're seeing thousands of elderly people who are saying that they must decide whether to put food on the table, heat their home, or buy prescription drugs," Mr. Pryor said.

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