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75–461 PDF 2001

S. HRG. 107–146

THE HIGH COST OF PRESCRIPTION DRUGS

HEARING

BEFORE THE

SPECIAL COMMITTEE ON AGING

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

JEFFERSON CITY, MO

AUGUST 27, 2001

Serial No. 107–13

Printed for the use of the Special Committee on Aging

(

SPECIAL COMMITTEE ON AGING

JOHN B. BREAUX, Louisiana, Chairman

HARRY REID, Nevada

HERB KOHL, Wisconsin

JAMES M. JEFFORDS, Vermont

RUSSELL D. FEINGOLD, Wisconsin

RON WYDEN, Oregon

BLANCHE L. LINCOLN, Arkansas

EVAN BAYH, Indiana

THOMAS R. CARPER, Delaware

DEBBIE STABENOW, Michigan

JEAN CARNAHAN, Missouri

LARRY CRAIG, Idaho, Ranking Member

CONRAD BURNS, Montana

RICHARD SHELBY, Alabama

RICK SANTORUM, Pennsylvania

SUSAN COLLINS, Maine

MIKE ENZI, Wyoming

TIM HUTCHINSON, Arkansas

PETER G. FITZGERALD, Illinois

JOHN ENSIGN, Nevada

CHUCK HAGEL, Nebraska

MICHELLE EASTON, Staff Director

LUPE WISSEL, Ranking Member Staff Director

(II)

C O N T E N T S

Page

Opening Statement of Senator Jean Carnahan .................................................... 1

PANEL I

Norma Muhleman, Florissant, MO ........................................................................ 3

Edna Sowells, Poplar Bluff, MO ............................................................................. 7

L.C. Lakes, St. Louis, MO ....................................................................................... 14

PANEL II

Robert Schmalfeld, AARP Volunteer Congressional District Coordinator, St.

Louis, MO ............................................................................................................. 28

Ken Bougeno, First Vice President, Missouri Council of Senior Citizens ........... 37

Anne Steele, Advocacy Chair, Older Women’s League, St. Louis, MO ............... 40

PANEL III

Dr. Lanis Hicks, University of Missouri School of Medicine ............................... 52

Dr. Stephen Zweig, Department of Family and Community Medicine ............... 64

APPENDIX

Written Testimony submitted by Mrs. Ruengert .................................................. 75

(III)

(1)

JEFFERSON CITY FIELD HEARING THE HIGH

COST OF PRESCRIPTION DRUGS

MONDAY, AUGUST 27, 2001

U.S. SENATE, SPECIAL COMMITTEE ON AGING, Jefferson City, MO

The committee met, pursuant to notice, at 10 a.m., in the Capitol

Building, Second floor, House Hearing Room 7, Jefferson City, MO,

Hon. Jean Carnahan, presiding.

Present: Senator Carnahan.

OPENING STATEMENT OF SENATOR JEAN CARNAHAN

Senator CARNAHAN. Good morning. I call the hearing to order. I

want to welcome each of the panelists that is going to be here

today and thank you for participating on what is a very important

subject.

I would also like to thank each member of the audience for being

here today. As many of you know, I am a member of the Special

Committee on Aging in the Senate, and our job is to help the Federal Government meet the needs of seniors. We gather information

for the Senate, we highlight important issues, and we make recommendations to our colleagues.

Today we are here in Jefferson City to spotlight the high cost of

prescription drugs. There has been a lot of discussion in Washington on the topic, but I wanted to come here and hear from you directly here in Missouri.

As you know, Jefferson City was my home for nearly 8 years. Not

only the Missouri capital, it is part of America’s heartland. So I

want to come here to mid-Missouri to hear your thoughts on drug

prices and how it affects your everyday lives.

During today’s hearing, we will be receiving testimony from a variety of people from across the State. I am pleased to announce

that Senator John Breaux of Louisiana, the Chairman of the Special Committee on Aging, and Senator Larry Craig of Idaho, the

Ranking Member, have sent staff members to be with us here

today as well, and together we will see that your message is taken

back to Washington and conveyed to the Senate Committee on

Aging.

Your message could actually not be more timely because next

week, when we go back to Washington, back into session, this will

be a high-priority item, the cost of prescription drugs.

Why is this such an important issue? It is important because

Medicare, the Federal program that provides health insurance for

some 40 million elderly and disabled Americans, does not include

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a prescription drug benefit. While it may not have been a necessary

component of Medicare when the program was first created back

in 1965, it is certainly unacceptable not to have it today. [Applause.]

Prescription drugs save lives, and they improve the quality of life

for millions of Americans. But when medication is unaffordable, we

fail our sick and elderly. And when those in need have to choose

between buying food or paying for a prescription drug, we are failing our seniors. And when older adults have to rely on family members to pay their drug bills, we fail both seniors and their families.

I hear these concerns everywhere I go, and I receive countless

letters and e-mails from people all over Missouri on this subject.

And it troubles me when I think about the tough decisions that our

seniors, living on fixed incomes, have to make every day—choices

between medicine and food, between medicine and rent, and medicine and heat. Sad and difficult decisions are being made every day

in homes all across Missouri.

I want to create a prescription drug benefit as part of Medicare

and have supported setting aside funds in the Federal budget for

this purpose. We are still working out the difficult details, but we

have agreed on a number of principles that a drug benefit should

meet. And I want to share some of those with you that I believe

in very strongly.

First, a benefit should be universal. Everyone that is enrolled in

Medicare should be eligible to receive the benefit. [Applause.]

Second, the benefit should be voluntary. Seniors should have a

choice as to whether they want to participate or not.

Third, the benefit should be affordable.

Fourth, the benefit should be stable. We want to create a benefit

that provides coverage for a long time, not one that is constantly

changing.

Fifth, the benefit should be available. It should not matter if you

live in an urban or suburban or rural setting. You should be able

to get prescription drug coverage wherever you live.

Finally, the benefit should be part of Medicare. We don’t need to

create a whole new system. Medicare is a program that works, and

it is one that our seniors trust. We in the Senate need to understand what seniors need, the extent of the problem, and what the

consequences are if we fail to act.

We are privileged today to have three panels of speakers here to

address some of these questions.

The first panel is made up of Missouri seniors who will be speaking about their experiences in struggling to meet the increasing

cost of drugs.

The second panel is comprised of representatives of organizations

that advocate on behalf of Missouri’s seniors, and they will be sharing with us their recommendations on how to craft a Medicare prescription drug benefit.

The third panel will provide a look at the scope of the problem.

They will also examine the impact of drug prices on the health of

seniors and on health care in general.

I look forward to hearing the testimony and to learning from

their experiences, and I hope our audience will gain a greater understanding of this complex and costly health problem as well.

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Now I would like to introduce the first panel of speakers, but before I do so, I probably should introduce someone else, who is in

the audience who will not be participating, and that is a woman

by the name of Doe Ruengert. She is here from Jefferson City, and

she has submitted written testimony for the record on her care for

her 91-year-old aunt, Dorothy Creighton. Mrs. Ruengert is a nurse,

and she has cared for her aunt for a number of years in her home

because her aunt was unable to live alone because of the cost of

her prescription drugs. Mrs. Creighton pays upward to $800 a

month just for prescription drug costs alone. So I appreciate her

being here, and I will be referring to her testimony again later on.

Our first witness is Norma Muhleman from Florissant. If the

three of you, as I call your names, if you would take your seats up

here? She wrote to me back in March. Nice to have the chance to

meet you today. You wrote to me about your husband and about

your costs for your bills. Norma and her husband have lived in

Florissant for 40 years. They were in business together for the past

13 years before he retired. She is the mother of a son and daughter

and has three grandchildren. So we appreciate your being here

today.

The second gentleman is Mr. L.C. Lakes from St. Louis City. Mr.

Lakes is a retired welder. He is a member of the Friendly Temple

Baptist Church. He is on the committee there that builds housing

for senior citizens. And he also volunteers in the Caring Communities Program and works in the 22nd Ward to help provide a safe

neighborhood there. So we welcome you as well.

Then our final witness on this panel comes from Poplar Bluff,

Mrs. Edna Sowells. Is she here today? OK. Welcome. She is the

former head cook at the Lucy Lee Hospital and has been very active in her church and community.

So I will begin by turning our floor over to our first witness, Mrs.

Muhleman. Welcome.

STATEMENT OF NORMA MUHLEMAN, FLORISSANT, MO

Ms. MUHLEMAN. Thank you. Good morning, Senator Carnahan,

and everyone else. I appreciate very much the opportunity to speak

to you about my concerns about a prescription drug plan.

My husband and I are Medicare enrollees as well as we have

Medigap plans to supplement Parts A and B of Medicare. But none

of these plans pay for prescription drugs, dental, nor eyeglasses.

My husband has been on oxygen 24 hours per day for a few years

because of his emphysema, heart problems, and other things that

entail his having to use very expensive prescriptions. We do not

have prescription insurance on any of our plans, and in checking

the Medigap policies that would allow us coverage, if they accepted

us with our medical problems, they have a cap or a limit on prescriptions that would only pay for a proverbial drop in the bucket

on our cost of prescriptions, especially after paying the higher rate

for prescription coverage. It would not help us at all.

We have investigated everything we have ever heard about, and

there does not seem to be any plan that we could get paying for

it ourselves that would help.

Two years ago, our prescriptions and out-of-pocket expenses were

around $5,500. Last year, it was approximately $8,000 out of our

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own pockets. As you can see, it increases constantly with the cost

of drugs, et cetera.

We have thought for a long time that Congress should provide

something to help people like us, of which there are many around

us with the same problems, such as insurance where we could pay

the premiums but enable us to have a copayment, like the large

companies in the country provide for their employees.

We are very satisfied with Medicare as it is and hope it is not

changed, other than to add a prescription drug plan that will pay

for our prescriptions, with us paying a premium and a small copayment on our part.

Medicare has been tested many times with us, as my husband

has been in the hospital many times, and we are thankful for its

good coverage, along with our Medigap supplemental plans we

have, but the drug costs are killing us.

We have worked hard and live economically. My husband worked

as long as his health permitted and was 72 years old before he had

to give up his work. Even then, while he was still working, he was

on oxygen at night after working hours. We are hoping for something that allows us to pay premiums, as we do Parts A and B on

Medicare, for our prescriptions. We are not asking for something

free, but feel we older middle-class citizens deserve this opportunity.

Thank you.

[The prepared statement of Norma Muhleman follows:

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Senator CARNAHAN. Thank you, Mrs. Muhleman. I appreciate

your sharing that story with me. I had the opportunity to care for

my father for 71⁄2 years, and he had emphysema and diabetes and

asthma. And so I can understand some of your concerns and some

of the things that you have been going through.

Let’s see. Mrs. Sowells, if you would?

Ms. SOWELLS. Do I push this button here?

Senator CARNAHAN. I believe that is correct, yes.

STATEMENT OF EDNA SOWELLS, POPLAR BLUFF, MO

Ms. SOWELLS. Good morning. My name is Edna Sowells. I am

from Poplar Bluff, MO. Thank you, Senator Carnahan, for giving

me the opportunity to testify this morning to millions of people like

me for some sort of prescription drug relief.

For a number of years, I was a head cook at Lucy Lee Hospital

in Poplar Bluff, MO. I have also been very active in my community,

church, and helping neighbors in time of need, and babysitting and

cooking food. I have been happily married for 44 years and have

three wonderful, precious children.

Several years ago, I was diagnosed with diabetes I, I was able

to control that by taking a pill and monitoring my diet. About 14

years ago, I lost a massive amount of blood that led to a radical

surgery because I had only two pints of blood left in me. After this

surgery, I tried to go back to work but found it impossible; therefore, I went on Social Security disability for stiffness on my right

torso and my left foot and leg by a hysterectomy and surgery to remove a cyst. Since this surgery, my diabetes has now progressed

and forced me to take two shots a day, two pills a day.

When I became disabled, not only the source of my income, a Social Security disability check, I also received medical help with my

doctors’ and hospital bills. However, I have no help to pay for my

monthly prescription drugs. I pay at least $200 or more for my prescription drugs alone. For example, this month of August, I paid

$206 at just one drugstore for my hives, my blood pressure, my diabetes, my nerves, my cholesterol, my acid reflux, and this in addition to the payments I have to make for my equipment. For example, last month, at a different drugstore I spent $120 for test strips,

$13 for needles and syringes, because I got them on sale. I have

to buy new equipment at least every other month and a half. However, sometimes money is so tight that I re-use the needle and syringes and alcohol swabs after thoroughly cleansing and contacting

my doctor for samples or even resort to cutting pills in half in order

to save a few dollars a month.

Because of this high prescription drug cost, I have to sacrifice

several things that I would love to do, I would love to have the opportunity to do. I am unable to go out to dinner with my husband

to a nice place and can no longer donate any money to my church

or buy my kids and grandchildren gifts. These are all things that

I used to do and enjoy before I became sick. I never dreamed that

this would happen to me or that it would be difficult to survive

once I stopped working.

Senator Carnahan, I was an orphan from the age of 10, and I

learned at a young age how to be thrifty and efficient. I taught myself how to cook and sew in order to survive. However, things are

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really tight, and I am unable to make ends meet. I would really

benefit from some sort of prescription drug relief. Please work hard

to address my and every other senior’s needs for the prescription

drug benefit.

Thank you very much for the opportunity to speak today, and I

appreciate your kindness and concern.

[The prepared statement of Edna Sowells follows:]

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Senator CARNAHAN. Thank you, Mrs. Sowells. I think your testimony—sometimes we focus just on seniors, and we don’t always

focus on those who have disabilities as well, because that cuts back

on the amount they are able to earn, and it also increases what

they have to have as far as equipment and prescription drugs. So

I appreciate your telling us about that.

Mr. Lakes.

STATEMENT OF L.C. LAKES, ST. LOUIS, MO

Mr. LAKES. Yes, good morning, Senator Carnahan.

Senator CARNAHAN. Could you get closer to the microphone?

Thank you.

Mr. LAKES. For the record, my name is L.C. Lakes, a resident of

the city of St. Louis, MO, in the 22nd Ward. I was born on November 20, 1932. I am currently retired. In my life, I have worked in

several jobs, most notable working as a welder for 27 years. I am

currently Captain of Block Unit 294, and an active member of several neighborhood initiatives aimed at improving the quality of life

for the residents of our community. I am a member of Friendly

Temple Baptist Church in St. Louis. I work on our church committee to build houses for the senior citizens.

I was also involved in the successful effort to locate a police substation in our neighborhood to help us fight the problems of drug

abuse and crime in the 22nd Ward. I actually worked with the police officers, the aldermen, and other public officials in the effort to

demolish the nuisance properties that are used to sell drugs. I have

also volunteered with the Caring Community Program under the

direction of Mr. Khatib Waheed in St. Louis to provide fun and safe

activities for our youth.

I sincerely thank the committee for the opportunity to appear before them to discuss the critical issues of prescription drug coverage for senior citizens. It is an issue that either affects now or

it will affect everyone in our Nation. Everyone in the United States

is going to get old sooner or later. If you have a little luck, you will

get to be an old man like me. But you are going to have to have

a little luck.

My wife and I are now both retired and living on a fixed income.

My wife receives a pension from St. John’s Hospital where she

worked for 28 years. She received Social Security benefits after she

retired from St. John’s. My wife was part of the HMO that the hospital provided for employees. While she was covered, she had to

pay $200 every month to stay in the HMO. I also received coverage

on her plan for a monthly fee.

Since my wife required so many different kinds of medicine, she

was put out of the HMO. Since then she has been forced to seek

a private insurance plan due to the high cost of our prescription

drugs, especially for her heart condition. She spends several hundred dollars monthly for this medication. I was also put out of the

plan because my wife lost her coverage. I pay the AARP $110 every

month for supplemental hospital coverage.

Since Medicare only pays 80 percent of the cost of any hospital

stay, the AARP pays the other 20 percent. Again, this only covers

a hospital stay, not the cost of medicine. If it were not for this coverage, my wife and I would have nothing. For us in a time of bad

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health, my wife and I both require several prescription drugs each

month to maintain our health. I am on four prescriptions. My wife

has been placed on nine by her doctor. I must spend $33 a month

for—some of these medicines here I am unable to pronounce the

name of them, but we got some things here—but I will go on to the

others. To treat my high blood pressure and my borderline diabetes

requires two medicines, Glucotrol and Glucophage, I think it is.

They cost $35 for 30 pills. My doctor also prescribes Baycol for my

high cholesterol, which has since been taken off the market. My

wife’s situation is even more serious. She must take nine different

kinds of medicine, her gout prescription.

Senator, here are some more of the medicines here. I am not a

doctor, so I can’t pronounce a lot of these. But, anyway, the cost

of this medicine is $10 for 20 tablets. The prescription for the heart

condition costs $100 for 30 tablets. Due to their high cost, we can

only afford to buy 15 at a time, half those what the doctor prescribes. Her high blood pressure medication costs $80 for 60 pills.

Since she has to take two every day, she also needs a second blood

pressure medicine which costs $30 a month. The complications

from her blood pressure also forced her to take a $30-a-month prescription to remove water and fluid from around her heart and a

$35 prescription for another one of them, Senator. Her doctor also prescribes 60 potassium tablets at $49 a month.

She also needs 120 tablets a month for Cuminid, a blood thinner,

I believe that is. But she can only afford 30 at a time. Her

Glucophage prescription for diabetes costs $45 for 60 tablets and

$40 for her prescription of Glyburide, or whatever that is.

We must pay for all of this medicine I just read to you on a fixed retirement income of $886 a month for me, $730 a month for my

wife. After requiring Medicare deduction of $50 each, together we

have to survive on about $1,600 a month, and for that we must pay

our electric bill, gas bill, water, sewer, food, and other expenses. If

it wasn’t for my wife’s history at St. John’s and our friendship with

the doctors and nurses, we wouldn’t be able to get the free samples

that we need from them, which keeps the medicine costs where

they are now.

Even now we have to cut back on the medicine that my wife

needs because we just don’t have the money. I urge you, Senator

Carnahan, to do what you can to help us older Americans with a

prescription drug benefit. You can do a great deal to make our lives

easier. No one should have to choose between the medicine they

need to live and food to eat, we senior citizens need your help.

Again, thank you for the opportunity to come before you. Thank

you for hearing my concerns and those of other seniors in my community. Thank you.

[The prepared statement of L.C. Lakes follows:]

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Senator CARNAHAN. Thank you, Mr. Lakes. I notice you indicated

that it takes a little bit of luck to age successfully.

Mr. LAKES. Yes, ma’am.

Senator CARNAHAN. But we want to try to eliminate the necessity for luck and put a little more certainty into aging, and having

a prescription drug benefit would certainly help to do that.

Mr. LAKES. Thank you, ma’am.

Senator CARNAHAN. I would like to go to the questioning now of

our panelists here for a minute. I can tell that you are making

some budget decisions as you look to your costs, and that perhaps

there are some sacrifices you are having to make. I can tell that

you are already trying to—I believe, Mr. Lakes, you mentioned that

you use samples sometimes that your——

Mr. LAKES. The doctors sometimes have. And if I may, Senator,

sometimes when the medicine gets to selling, they don’t have samples. They stop giving them out once they get going. And then the

doctor don’t have them. But it is mighty nice when the doctor gives

them whenever he can.

Senator CARNAHAN. Then I believe it was, Mrs. Sowells, you indicated that sometimes you also use samples and that you halve the

pill sometimes in order to make it go farther. But I am just wondering. You are making some adjustments in your medicines. What

adjustments are you making in your budget? What is it you are not

able to do as a result of this? What kind of sacrifices of priorities

are you having?

Ms. SOWELLS. Well, I can no longer be no help to my family. I

can’t do anything for my church activities. I can’t do anything for

my grandchildren. And when it comes right—I don’t do very much

for my husband, and when it comes right down to me, you just

might say we do without to stretch and make it. And I was telling

Jason and Rich that we was with, two very nice men—appreciate

their help—you have to learn to live within your income. If you

keep going out of your income, you are going to really be in deep

trouble. And I know I do a lot of things that I shouldn’t do that

the doctor don’t want me to do, but you have to do in order to make

it. They want you to use a needle and syringe one time. I can’t do

that. I can’t make it. Most of the time they run $20 a month. And

I re-use the needle and syringes after I thoroughly clean them. And

on my medicines, sometimes when it gets so tight, I figure a half

a dose is better than no dose. So I will put it in half in order to

stretch it out.

Senator CARNAHAN. Would any of the others like to comment?

Mrs. Muhleman——

Mr. LAKES. I would like to say that—and me and my wife——

Senator CARNAHAN. Could you speak a little closer to the microphone?

Mr. LAKES. Yes. Me and my wife’s situation comes that sometimes we have to go to some of the city programs like energy and

things like that to get some of our bills paid, like lights and gas.

At this time of month we go and try to get help from the energy

people to help us out there, and sometimes we were able to do that.

And right now it is kind of hard since we got a new President to

get that done. You know, they don’t have no money half the time,

they say, and if they ain’t got it, they can’t give it.

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When wintertime come, we go to the gas—go back to the problem

of gas, and me and my wife have that problem, you know. As she

said, do the best we can. That is all we can do. But it is a long

way from where we should be. I worked hard all—it ain’t like,

again, we are asking for something for nothing. I worked for some

30 years and just think it is no more than fair to try to give us

some help.

Senator CARNAHAN. Mrs. Muhleman.

Ms. MUHLEMAN. It takes a lot of ingenuity, as Mr. Lakes says,

with increasing gas prices, gasoline for the cars and also for heating, and for air conditioning. And it really keeps you busy, you

know, juggling the budget. And sometimes it does have to come out

of savings whether you really want to or not, because my husband’s

medicines are very expensive. They are, I guess, some of the most

expensive that a person has to have for his condition. And I have

health problems, too.

Senator CARNAHAN. Have any of you tried to get insurance to

cover your drug prescriptions? I think you mentioned, Mrs. Sowells,

that you had attempted to do this.

Ms. SOWELLS. I wasn’t able to do this until—my husband does

it for me. I cannot do it. He bought me a supplement insurance for

the 100 percent deductible and 20 percent copayment. But it does

nothing for drugs. And that runs him over $1,000, $1,200 a year

for this insurance, which right at this present I am still paying on

hospital bills that I had 3 and 4 years back that I am still paying

on monthly besides everything else.

But I was not able to get insurance until then. Everybody would

turn me down, or it would either be so high, we could not afford

it. There was no way that we could get it and pay for it.

Ms. MUHLEMAN. Also, they will not take a lot of people that have

pre-existing conditions.

Ms. SOWELLS. That is right. That is right.

Ms. MUHLEMAN. We have tried many times.

Senator CARNAHAN. So you have tried, but you didn’t find anything that was attractive.

Ms. MUHLEMAN. Nothing. And the cap is usually $500, and that

is nothing—for us, at least.

Senator CARNAHAN. Mr. Lakes, did you——

Mr. LAKES. Yes, ma’am. I did want to say just what she just

made the statement, that my wife, being an HMO, she jumped

from one to the other on account of $500 is the limit there. And

a couple of months at the most, she’s out of that $500 due to her

condition and heart trouble. Some of the medicines cost about $3

a pill. It is something she got to have, you know, and——

Senator CARNAHAN. One of the issues that we are going over in

Washington is whether or not a prescription drug benefit should be

a part of Medicare or whether it should be covered by private insurers. Do you have any opinions on that? I see you shaking your

head over here, Ms. Sowells.

Ms. SOWELLS. I would rather have Medicare than insurance, like

I was talking about the insurance that my husband got, it was

through his cousin that found this company to insure me, or I probably wouldn’t be insured today. And as I said when we first started, it was about $1,000 for a little over a year, but now then it has

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gone up to $1,250 a year to insure me for the $100 deductible and

the 20 percent copayment. But, at that, it still does not cover none

of the prescription drugs or anything that I have to have, like my

expensive machines. And I guess Rich got a little—looked at me a

little funny, but I kept saying, ‘‘Do you lock your van? Do you keep

this locked? Do you keep that locked?’’ Because I have got all my

medical supplies with me that I had to bring, and like I told him,

I have things that I cannot replace. They are too expensive. My

machine monitor and my—well, all my pills. There for a while I

was carrying them in my purse, and I was tearing up my purse.

And so I had to buy an extra bag in order to put all my medication

in that bag, you know, to move it around. And I told them it is like

going somewhere, it is just like moving, picking everything up and

going.

But, no, I would rather to have it on Medicare than any insurance company.

Senator CARNAHAN. You just feel a little more confident being

under Medicare.

Ms. SOWELLS. Yes, I do, because I feel like they wouldn’t turn

you down as quick as what an insurance company might turn you

down on something that you would really need that they think,

well, you really don’t need that. Even if the doctor says you need

it, they might think you don’t need it.

Senator CARNAHAN. How do you feel?

Ms. MUHLEMAN. I think it should be with Medicare and us pay

a premium like we do Parts A and B. I am very much for that.

Ms. SOWELLS. Yes.

Mr. LAKES. So I am. She speaks for me, too.

Senator CARNAHAN. OK. Very good. Well, as we mentioned earlier, we want to try to make this to be a voluntary benefit. But in

order for it to work, we are going to have to have some features

in it that are attractive to people. If we have to place limits on

what we offer, what would you be willing to accept in terms of

copay, deductibles, premiums, and so forth? What do you feel like

you could afford to accept?

Ms. SOWELLS. Anything would beat what we are doing right now.

Senator CARNAHAN. OK. But, I mean, how much do you feel

would be an acceptable amount that you could afford, say, a

month?

Ms. SOWELLS. Well, if it would cover most of the drugs, even if

we would have to pay a small amount, if it was something like

Medicare, if we would have to pay a premium like Medicare in

order to get the drug prescriptions, it would pay us to do that. It

would be well worth it of what we are already paying. And then

if we had to pay a little bit on each prescription, that wouldn’t

be——

Senator CARNAHAN. So you don’t object to a copay? You would be

willing for a copay?

Ms. SOWELLS. If it is necessary, yes.

Senator CARNAHAN. And some sort of deductible feature as well?

Ms. SOWELLS. Such as?

Senator CARNAHAN. Oh, like a $250 deductible before——

Ms. SOWELLS. In other words, you would have to be out the $250

before it would kick in?

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Senator CARNAHAN. Right.

Ms. SOWELLS. Yes, ma’am. Yes, ma’am.

Senator CARNAHAN. Mrs. Muhleman, that is sort of——

Ms. MUHLEMAN. That would be good.

Senator CARNAHAN. You would be willing to pay a deductible?

Ms. MUHLEMAN. A copayment and a deductible would be OK.

Mr. LAKES. Well, I don’t agree with the $200 deductible. You

know, I just don’t agree.

Senator CARNAHAN. You think that is too high?

Mr. LAKES. Yes, ma’am, I do. I think it is much too high. See,

if you go with the HMOs, if they would stand still instead of the

30 months, they have maybe 5 months and 6 months, take a whole

year in there, I would have thought it would be good. But if you

are using a lot of medicine with an HMO, $500 is only a little bit,

even though you pay $10 for that copayment, it is fine, but it don’t

last. So if you got to pay $200 or $300, or whatever, that is too

much. I don’t agree with that. I don’t mind paying something,

but——

Senator CARNAHAN. And this question might cause you to range

out a little bit and think in terms of some of the friends that you

know who have similar problems. Do you think that what you are

going through is typical of the senior community?

Mr. LAKES. Yes.

Ms. SOWELLS. Absolutely.

Senator CARNAHAN. Mrs. Muhleman.

Ms. MUHLEMAN. Yes. In the breathing centers and places where

my doctor has to go, and the hospitals, we find that this is very

common.

Senator CARNAHAN. In what way?

Ms. MUHLEMAN. Well, the high prescriptions, the expense, all

the—it is wonderful to have all these medicines, but they are very

expensive. Just terrible. And they keep going up all the time. So

it is a very common thing. Everyone talks about it.

Senator CARNAHAN. Among friends, OK.

Ms. SOWELLS. When one drug fluctuates $10 or $15 a month, it

just nearly chokes you.

Senator CARNAHAN. So this happens commonly, that the drug

would fluctuate and raise that much in a month’s time?

Ms. SOWELLS. Well, that is what my pharmacists tell me. At one time I had one pill that jumped up $12, and I called him, I said,

Oh, I can’t handle this. And he said, ‘‘Well we don’t want to do it,

but,’’ he said, ‘‘it’s getting to that. So we have to do it.’’ And I said,

‘‘Well, just don’t fill it.’’ Because it was already 30-some dollars,

and then when they add $12 more to it, that is 40-something. And

when you have got four or five that runs you 30 and 40 or close

to $50 a month—and that is not—like I said, that is not all that

you get. That is just part of what you get. You just can’t do it.

Senator CARNAHAN. What about your friends? Do you have

friends who are having similar situations?

Ms. SOWELLS. Yes. And another thing that I talked to Jason

about and Rich about, I talked to my pastor and some of my senior

citizens at my church about this, and they said, ‘‘Well, it sounds

like to me that if they would do this, people that are not taking

medicine or as sick as you are would be paying for your drugs.’’

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And I said, ‘‘No, that is not what they told me.’’ I said they reassured me that they had money put back for this and that it

wouldn’t be like that, it would be like Medicare. You either get

Medicare or not have Medicare. And I said that is what they told

me. And I said I believe that is the way it is. It would be hard to, like he said, cough up the $200, $250, but

it wouldn’t be anything—it wouldn’t be worse than what we are

doing now. We could more apt to do that than keep doing this

every month and every month and every month to where you—the

quality of life is not enjoyable. You just dread—every day you

dread what you have to do to live with your medicine. I don’t know

if anybody takes shots, but it is not enjoyable. And it was one of

the hardest things I ever had to learn to cope with.

Senator CARNAHAN. Mr. Lakes.

Mr. LAKES. Yes, ma’am. Senator, I would like also just to—sometime your medicine that you may be taking—I will just name blood

pressure medicine, for instance. It may stop working, and then the

doctor prescribes another medicine. Sometime there may be two. In

my case it was two prescriptions instead of that one I had before.

You know, I was taking—Pezotag was one, and now I am taking

two more that is supposedly going to do the same thing, but I take

two medicines, two prescriptions, which costs two pieces of money,

in the neighborhood of $35 or so for 30 pills. So that is a concern

to me. Medicine doesn’t always work, and when it stops working,

they go to another one.

Senator CARNAHAN. I have one final question, and if you would

each address this question. Did you have any idea that your retirement, what we often think of as our golden years, would be like

this?

Ms. SOWELLS. No, not at all. Not at all. I tell my children sometimes life is not worth living, and they would say, ‘‘Mother, don’t

talk like that. Don’t talk like that. We are not ready to give you

up.’’ And I said, ‘‘Well, when you can’t live a quality of life, you

know’’—and sometimes it is depressing. It is heart-breaking. It is

aggravating. It is frustrating. And I was talking about this one

drug that I told the druggist not to refill. I was already paying—

it was a nerve pill. My nerves was really bad, and the doctor said

I was right at a nervous breakdown when I quit work. And he had

me on four Xanax pills a day. And I was paying $60 a month, and

it got so bad, I went into him, and I said, ‘‘Do not refill that prescription anymore.’’ And he said, ‘‘Just a minute.’’ And he went to

the phone, and he called the pharmaceutical, that makes the medicine, and he was telling them about me, and I know they had

asked him, ‘‘Well, does she really need it?’’ He said, ‘‘Yes, or I

wouldn’t be calling.’’ Here this medicine was already 60-some dollars a month, and they said, ‘‘Let her have it at cost.’’ They started

charging me $20 for the medicine. That is what it took them to

make my medicine, was $20, which I had been paying 60—over 60-

some dollars a month for this one pill.

Senator CARNAHAN. Mr. Lakes.

Mr. LAKES. Senator, what I didn’t anticipate when I was younger, that I was going to have these problems when I got older, you

know, arthritis and all these other things.

Senator CARNAHAN. You were going to enjoy your retirement.

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Mr. LAKES. Yes. But, unfortunately, I got old—I am glad I am

living, though. [Laughter.]

But it just come up, you know, one thing after another. I thank

God that I haven’t got worse health, but we do need help, and we

are—I watch you a lot on the radio and what have you—on the television, I should say, and I will say this: You will get my vote all

the time. I will be working hard for you. [Laughter.]

Senator CARNAHAN. Mrs. Muhleman.

Ms. MUHLEMAN. My husband has a lot of infections that he takes

a lot of antibiotics constantly, and, of course, they are very expensive. And he has one medicine that goes in his nebulizer, or breathing machine, that a month’s supply costs over $200. And that is

just for his breathing machine. So these medicines are extremely

expensive.

Senator CARNAHAN [continuing.] told are very heart-rending.

They make us all the more determined to do something and to

help, and I appreciate your being here very much.

We will take a 5-minute break at this time.

Mr. LAKES. Thank you for having us, Senator.

Ms. SOWELLS. Thank you.

Ms. MUHLEMAN. Thank you. [Recess.]

Senator CARNAHAN. Could I have your attention? We will get

started with our second panel. Our second panel will feature advocates for seniors in Missouri who have been working to relieve the

burden of high prescription drug costs.

Robert Schmalfeld is an AARP volunteer congressional district

coordinator from St. Louis. Mr. Schmalfeld is a retired lieutenant

from the Navy and a former administrator at Oklahoma State University and more recently at University of Missouri in St. Louis.

We welcome you today, Mr. Schmalfeld.

Mr. SCHMALFELD. Thank you.

Senator CARNAHAN. Ken Bougeno is the first vice president of the

Missouri Council of Senior Citizens. Mr. Bougeno is a retired

Chrysler employee and has been very active in his local UAW chapter.

And, finally, Ann Steele, welcome. She is the advocacy chair of

the Older Women’s League. Mrs. Steele is a retired educator. She

taught in the Rittenour School District for 28 years, retiring in

1987, and she has been involved with the Older Women’s League

for over 10 years.

We are very privileged to have you all here today, and your written testimony will be included in the written record in its entirety.

But if you would please limit your prepared remarks to 5 minutes

today, that would be very helpful.

So we will get started with Mr. Schmalfeld.

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STATEMENT OF ROBERT SCHMALFELD, AARP VOLUNTEER

CONGRESSIONAL DISTRICT COORDINATOR, ST. LOUIS, MO

Mr. SCHMALFELD. Thank you, Senator. I am Robert Schmalfeld,

an AARP volunteer, currently serving as congressional district coordinator from the city of St. Louis. I appreciate the opportunity to

appear here today to discuss the need for Medicare prescription

drug coverage.

In the 36 years since the Medicare program began, prescription

drugs have become essential to the treatment and prevention of

disease. The lack of prescription drug coverage in Medicare has become one of the programs biggest gaps, leading beneficiaries vulnerable to substantial costs. Further exacerbating the problem is

the fact that other sources of drug coverage for older Americans are

inadequate and undependable.

For instance, the number of employers offering retiree health

coverage has seriously declined. In the 1980’s, an estimated 60 to

70 percent of large employers offered retiree health benefits. By

1993, that had dropped to 40 percent, and in 2000, it was only 24

percent for future retirees. Medigap plans provide prescription drug

coverage in only three of the standard ten plans, and these plans

are expensive and place limits on the benefit.

Medicare+Choice plans are dropping out of Medicare, increasing

premiums, or reducing benefits. As a result of inadequate and costly coverage, one-third of Medicare beneficiaries do not have prescription drug coverage, and this figure obscures the fact that only

53 percent of beneficiaries have prescription drug coverage for the

entire year.

Prescription drug coverage in Medicare would improve quality of

care, reduce unnecessary hospitalization, and offer the potential to

reduce the risk of drug interactions. That is why AARP is committed to creating a Medicare prescription drug benefit. In particular,

AARP believes that Medicare’s benefit package must be modernized to keep up with advances in medicine.

A Medicare prescription drug benefit must be available to all

Medicare beneficiaries. The benefit needs to be affordable to assure

a healthy risk pool. This means that healthy and low-cost beneficiaries must choose to enroll in the benefit in addition to those

who already have high drug costs.

Prescription drugs should be part of Medicare’s defined benefit

package set in law. It is critical that beneficiaries understand what

is included in their benefit and that they have dependable and stable prescription drug coverage. The benefit should provide protection against catastrophic expenses. The benefit must include additional subsidies for low-income beneficiaries to protect them from

unaffordable costs and assure that they have access to the benefit.

The benefit must be financed in a fiscally responsible manner that

is both adequate and stable. The benefit should be voluntary so

that beneficiaries are able to keep the coverage that they currently

have, if they choose to do so.

A new prescription drug benefit should also be part of a strong

and more effective Medicare program. Senator Carnahan, we commend you for holding this hearing today to draw attention to the

need for Medicare prescription drug coverage. AARP stands ready

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to work with you and your colleagues to enact a meaningful benefit.

Thank you.

[The prepared statement of Mr. Schmalfeld follows:]

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Senator CARNAHAN. Thank you very much.

I might ask you some questions right now before we move on to

our other panelists. I certainly appreciate the fact that AARP has

been such a strong advocate for a prescription drug benefit, and we

appreciate all that they are doing in that area.

You did mention a trend in your testimony. You said that employers and Medicare HMOs and other insurers are cutting back.

Is this going to put—when they do this, do you think this is going

to put a greater burden on Medicare beneficiaries? And do you

think that this trend will continue? And as a result, will it cause

Congress to have to heighten their interest in this topic and their

need to do something?

Mr. SCHMALFELD. I believe that the need to have a prescription

drug coverage in Medicare will increase as the number of employers continues to go down in terms of covering retiree benefits.

There will be more and more people without the prescription benefit, and there will be an even greater need across the board for

Medicare benefit—excuse me, a prescription drug benefit in Medicare.

If you think about it, the last 10 years there has been a 50-percent decline in the rate of coverage for those persons who used to

be able to rely on having a prescription benefit in retirement.

I am not sure whether I have completely responded to your question. I hope so.

Senator CARNAHAN. Thank you.

Let’s go on and hear from Mr. Bougeno, and then we will follow

up with some questions as well.

STATEMENT OF KEN BOUGENO, FIRST VICE PRESIDENT,

MISSOURI COUNCIL OF SENIOR CITIZENS

Mr. BOUGENO. Thank you, Senator Carnahan. My name is Ken

Bougeno. I am the first vice president of the Missouri Council of

Senior Citizens. I am here on behalf of them today. We also are an

affiliate of the Alliance of Retired Americans.

As a retiree of UAW Local 136, I feel very lucky that at the

present time we have a copay prescription program and I do not

have to make the choice between getting my expensive prescription

filled or eating. With each negotiation, we are losing a little piece

of our benefits, and the day could come when the corporation will

take away that benefit altogether.

There are 13 million senior citizens and disabled people who do

not have prescription drug coverage. Older Americans depend on

prescription drugs, and for many, drugs represent the difference

between life and death. Seniors spend 42 cents of every dollar that

is spent on prescription drugs, and they are the ones who can afford it the least.

As an officer of the Missouri Council of Senior Citizens, I can say

that we support the commitment of the Alliance for Retired Americans in lobbying for Congress to enact a universal, comprehensive,

and affordable prescription drug benefit under Medicare.

Seniors need an affordable copay prescription program that will

protect them from increasingly expensive drugs, and employers

should be provided with incentives to keep the prescription copay

and even expand on it in their own corporations.

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We have got to put some kind of control as well on pharmaceutical prices. They have just skyrocketed on us. [Applause.]

Senator, I want to thank you for the opportunity to come here

today, and on behalf of the Missouri Council of Senior Citizens, we

will support you in all your efforts, and anything we can do to help

you, please call.

[The prepared statement of Mr. Bougeno follows:]

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Senator CARNAHAN. Thank you very much.

Ms. Steele.

STATEMENT OF ANNE STEELE, ADVOCACY CHAIR, OLDER

WOMEN’S LEAGUE, ST. LOUIS, MO

Ms. STEELE. My name is Anne Steele. I am the advocacy chairperson for the Older Women’s League, the Gateway Chapter, which

is in St. Louis, and I have entitled my presentation to you today

‘‘Prescription for Change.’’ I want to begin my remarks by telling

you about a friend of mine whose name is Olivia, and I hope she

will be able to join us a little later on.

Olivia has been with us for 21 years and has worked ceaselessly

to develop a grass-roots organization to focus solely on issues

unique to women as they age. She strives to improve the status

and quality of life for midlife and older women. But when prospective members ask me how old you have to be to get into this organization, I reply, ‘‘39 or over, or ever hope to be.’’ And we even take

men.

We work together to bring about these following goals, our organizational priorities: health care, and we have had a lot of explanation of that; economic security; and quality of life. Those are the

three issues that we support legislation, we work on those, so on

and so forth.

Now, I want to talk about why are so many older women poor.

By far, more retired women are much less able to support themselves, to support themselves with any degree of quality of life than

men. Why is that?

When I was a kid growing up, there were three professions I

could go into, and that was a secretary, a nurse, or a teacher. And

I ended up being the teacher. But women’s professions have

changed a little bit, but since these were women’s professions, the

pay was low.

Women now are free to become trained in almost any field that

they have the interest, aptitude, and opportunity. But just think,

when the former man, Mr. Lakes, he said, ‘‘You have to have a little luck.’’ And that is what opportunity is, too.

So I believe that you have to have that combination. It just

doesn’t come out and lay itself at your feet because you have aptitude or interest. It is that opportunity that really makes a difference in what you and I do with our lives, whether you are 80

or whether you are 8.

In June 1963, the historic Equal Pay Act was signed into law

after a protracted 18-year battle. Thirty-eight years later—that is

now—women have gained 13 cents in the pay gap. Instead of 59

cents for every dollar earned by men in 1963, we now earn 72 cents

on the dollar. OWL has long called for the full enforcement of wage

and age discrimination laws, as well as a speedy closure to the widening gap separating men’s and women’s wages.

Since Social Security monthly benefits are based on a worker’s

wage history, women who earn less become retirees who have less

to live on. Older women depend most heavily on Social Security as

a financial foundation. The poverty rate for women 65 and older is

almost twice that of men, 12 percent vs. 7 percent. The average

older women lives on $15,615 a year, vs. an average of $29,171 for

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her male counterparts. And women live an average of 6 years

longer to stretch this money for some quality of life.

For the women of color, the pay gap is magnified. African American women earn 65 cents and Latinas only 52 cents for every dollar earned by a white male. This cycle of low wages continues into

retirement where African American and Hispanic older women

have almost 3 times the rate of poverty as white women.

Savings are very hard to manage when you don’t make enough

money to keep body and soul together, so the third leg of that retirement stool is often denied women because of their lack of income all through their lives.

I want to refer a little bit to the ERA because we are trying to

get that passed in the State of Missouri, and we are not succeeding.

It started back the days when our Constitution was written, this

discrimination of women. When Abigail wrote to John and said,

‘‘Remember the ladies,’’ he wrote back and said, ‘‘Depend upon it.

We know better than to repeal our masculine system. I’d rather

give this up. I hope General Washington and all our brave heroes

will fight against it,’’ meaning putting women in the Constitution.

And so it was.

[The prepared statement of Ms. Steele follows:]

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Senator CARNAHAN. Thank you very much. I am sure there is

more there that we would all like to hear, but we probably should

move on back to the topic here of drug coverage.

There is one part of this that I would like to ask your opinion

on. We haven’t had much discussion about Medigap, but do you

feel, as some people do, that it is unrealistic to think that Medigap

is going to provide coverage for our seniors? What would a typical

Medigap policy cost?

Mr. SCHMALFELD. I am sorry. I can’t respond. I don’t know.

Those who are—it would depend upon age and a number of other

things, and I don’t have that information in front of me. Maybe

others do.

Senator CARNAHAN. So you never tried to get Medigap coverage

or——

Mr. SCHMALFELD. Fortunately, I am with that small group of employers that continues to provide insurance, and so I stand in a minority here because I worked for a large university which continues

to make prescription drugs available to me at—still, I share in the

cost, but—so I do not have a Medigap program myself.

Senator CARNAHAN. I am sorry. Over here?

Ms. STEELE. I can tell you my husband spends $130 a month.

Senator CARNAHAN. $130 a month.

Ms. STEELE. [Inaudible comment off microphone.]

Senator CARNAHAN. Do you know which plan that is of the ten

plans, which one——

Ms. STEELE. [Inaudible comment off microphone.]

Senator CARNAHAN. Thank you.

Mr. Bougeno, as a new retiree, I am sure you are planning on

relying on your employer’s drug benefit. Do you have any fears that

it might be cut or eliminated? Would you talk into the microphone,

please?

Mr. BOUGENO. I feel it is being cut on a daily basis—not quite

daily, but monthly basis. We are losing just little bits here and

there. There used to be gray areas that the insurance companies

would go ahead and pay. Today they are just moving those over to

the side. They will not pay them. And those are areas that we have

been used to all these years paying, and they were not actually negotiated items, and they were in what they call—they call it ‘‘gray

area.’’ So now they are not paying them. So we are losing just a

little bit with each passing day.

Senator CARNAHAN. I noticed that you advocated a Medicare benefit—I am sorry, a prescription drug benefit under Medicare as opposed to a private insurer. Would you tell us your thinking on that?

Mr. SCHMALFELD. Why it should be in Medicare?

Senator CARNAHAN. Yes.

Mr. SCHMALFELD. We believe that presently the Medigap programs that there are have basically eliminated prescription drug as

a covered item, and that practically the only choice that remains

ahead of us for having any hope of having coverage at all is

through Medicare.

Going back historically, I don’t think any of us could have imagined 36 years ago the degree to which prescription drugs would

play a part in terms of managing health conditions. That has

grown considerably. There have been many breakthroughs that

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have made using prescription drugs the treatment of choice that

one could not have imagined.

With this has come a great increase in terms of cost. A new drug

coming on the market, the pharmaceutical company will get as

much as it can for as long as it can before allowing it to become

a generic drug. In fact, we have seen some instances where the

Congress has taken action to extend the patent period for certain

drugs, which makes it even more difficult for people to be covered.

I think it is the only choice that remains ahead.

Earlier this month, on the occasion of the 36th anniversary,

AARP went to all of the offices of Senators and representatives, including yours in St. Louis, and presented a cake with a piece out

of it, which said prescription drugs—and that piece out was the

prescription drug benefit that is yet to be enacted. And we hope

that the Congress will move toward enacting this, particularly

since monies have already been identified and are just waiting for

a bill to be introduced that utilizes those monies appropriately.

Senator CARNAHAN. I did hear about the cake that was delivered,

and I hope that I will be able at some point to return you a slice

of cake and say this is what we have done, we have put it all together. [Laughter.]

Mr. SCHMALFELD. Thank you. We look forward to that.

Senator CARNAHAN. Mrs. Steele, I certainly admire what your organization is doing on behalf of women and the studies that you

are making. In drafting a Medicare prescription benefit, though,

are there certain issues that we need to focus on that would be particularly helpful to elderly women?

Ms. STEELE. I believe that it has to be stable and it has to be

protected so that inflation—so that with inflation the amount of

coverage for prescription drugs will increase also. I think it has to

be—in order to pay for this, we are going to have to have everybody

in the pot, because you simply cannot pay for it if only the sickest

choose coverage.

So those are the things that I see, and, of course, that everybody

gets the kind of care they need; instead of saying we are going to

cover this, this, and this, you have a menu of choices.

Senator CARNAHAN. Well, how can we—you say we need the lowcost beneficiaries in there as well to expand the pool. How can we

make this benefit more attractive so that more people will want to

take part?

Ms. STEELE. Well, I think even those who have—well, let me say

that I am one of those who no longer is insured by a former employer. When my husband retired in 1987, we were told we would

have lifetime coverage. That ended in 1997, and we knew it was

going to end in 1993.

Senator CARNAHAN. So the stability factor is a very important

one.

Ms. STEELE. Yes. But it also means that I have to go out and find

my own. I am not part of a group anymore, which makes it much

more difficult.

So I just think we have to be able to count on a community. We

are a community. We need to work together as a community to protect everybody in that community.

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Senator CARNAHAN. Mr. Schmalfeld, would you like to comment

on that, how we can make it more attractive?

Mr. SCHMALFELD. Obviously it has to—the Congress needs—it is

a very daunting job. They have to devise something that will be attractive to——

Senator CARNAHAN. And affordable.

Mr. SCHMALFELD. And affordable to everyone. And I think this

is a kitchen-table kind of issue, that when the plan is devised, that

people will sit around the kitchen table and say this is what we

are paying now, this is what is proposed under this system, does

this look like it is moving in the right direction? Does this make

it interesting and affordable and appropriate for us to adapt? Until

a program is devised, it is really hard to comment and say this is

the way, this is the deciding factor that I am going to decide to sign

up because it is a good deal, not because it is something that I am

going to pay more on. Or you weigh out the difference. You say,

well, my insurance costs—which I didn’t say earlier. You asked

about the cost and so forth. I failed to mention that over the years

since I have retired in 1996, my insurance rates have increased by

more than 45 percent. So while I am still covered, more of my resources are being spent to provide that benefit. And I heard recently in a newsletter that that cost is going to go up even more.

So I think people are going to be very practical about this. It is

a money issue, and it is like look at what the details are, what it

is going to provide, what is the deductible, what are we paying

now, what has our history been with drug costs, is it going up, are

we likely to lose our insurance benefit, as one of our panelists has

talked about, or be reduced. Are we on a better path going into

this?

I think the other thing is that as a program is offered, those concerns—then companies that offer prescription benefits now as part

of retirement benefits are going to have decisions to make. Hopefully they will continue them. If they don’t continue them, one of

the options is going to be perhaps to pay the cost of that, whatever

the charge is under Medicare, and also to provide wrap-around

things.

Another thing that AARP is concerned about is low-income persons, people who need additional help to pay for the cost of insurance, which is true now in terms of Medicare Part A. If you are

in a certain low-income basis, you have that premium paid.

So there are options out there that I think common-sense people—it is a money issue. They are going to have to look at all the

details, and they are going to have to decide whether it is worthwhile or not. But if we don’t attract the large numbers, then it is

not going to work.

Senator CARNAHAN. Well, thank you so much for sharing these

experiences with us today. We are going to have to move on to the

third panel. I notice we are running out of time. But, again, thank

you very much for being here. [Applause.]

Our final panel will explore in greater detail the serious impact

that high prescription drug costs are having on Missouri seniors.

Our first witness today will be Dr. Lanis Hicks, professor in

health service management at the University of Missouri School of

Medicine. Dr. Hicks has been involved in several projects with

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rural hospitals, conducting environmental assessments and market

strategies. She also conducts research into the cost-effective delivery of health services in rural areas. Welcome, Dr. Hicks.

Dr. Stephen Zweig is—did I say that, pronounce that—Zweig, I

am sorry. Dr. Stephen Zweig is a professor and associate chair and

coordinator of geriatric activities at the Department of Family and

Community Medicine at UMC. He is also director of the Care and

Aging Program at the UMC Hospital and Clinic. Dr. Zweig has received numerous awards and honors and has focused much of his

career and training around geriatrics, and we are very honored to

have these distinguished panelists with us today.

Again, your written testimony will be received into the record,

and I ask you to make your presentations—keep them limited to

5 minutes.

Dr. Hicks.

STATEMENT OF DR. LANIS HICKS, UNIVERSITY OF MISSOURI

SCHOOL OF MEDICINE

Dr. HICKS. Thank you for the opportunity to be here today to discuss the issue of seniors and prescription drugs. My name is Lanis

Hicks, and I am a professor of health economics in the Department

of Health Management and Informatics at the School of Medicine.

As this first graph shows, there has been a rapid increase in expenditures on health care, and the expenditures on the prescription

drugs has been increasing even more rapidly. In 1996, they accounted for 6.5 percent of total expenditures. In the year 2000, they

were up to 8.9 percent. And by 2010, they are expected to account

for almost 14 percent of the health care expenditures.

These rising expenditures on prescription drugs are not necessarily bad, but the implications of the increases have to be examined. Prescription drugs are increasingly used as components with

our other medical interventions as complements to improve patient

outcomes. They are used as immuno-suppressants used with organ

transplants. Other prescription drugs are used to substitute for

more invasive procedures, such as lipid-lowering drugs to reduce

the need for bypass surgery, and to treat medical conditions that

previously we weren’t able to treat, such as Parkinson’s disease.

Furthermore, as our knowledge and understanding of genetics

grows, pharmaceuticals are expected to grow exponentially. These

changes in pharmaceutical products are expected to have a disproportionate impact upon the seniors since seniors represent the

cohort relying mostly on prescription drugs to manage their multiple health problems. Seniors not only have more problems with

their health, but their health problems tend to be those that respond to drug therapy.

In 1996, 89 percent of seniors reported having one or more chronic health problems, and almost 10 percent reported having five or

more chronic problems. Chronic health problems have major implications for expenditures on prescriptions. Currently, seniors account for about 13 percent of our total population but incur about

43 percent of our total prescription drug expenditures.

There is discrepancy in the utilization of prescription medications

and the expenditures on prescriptions between Medicare beneficiaries that have insurance coverage and those that do not have

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insurance coverage. As this graph shows, the dark line is those

that do not have any kind of benefit coverage, and the other ones

are those that have benefit coverage.

As the data show, individuals with insurance coverage filled on

average 24.4 prescriptions while those without coverage filled 16.7

prescriptions. These same discrepancies hold even when the adjustments for health status, economic conditions, and chronic conditions are considered.

Under all circumstances, individuals with insurance coverage on

average utilized more prescription medications than individuals

without insurance coverage. As shown, non-covered seniors living

below the poverty level only utilize about half the number of prescriptions as covered seniors below the poverty level use. Non-covered seniors indicating poor health status use about a third fewer

prescriptions than covered seniors in poor health.

These data indicate the critical role that insurance plays in the

utilization of prescriptions medications by seniors. Non-covered individuals with five or more chronic conditions average $1,051 on

prescriptions while covered individuals with five or more chronic

conditions average about a little over $1,800, about 75 percent

more, although covered individuals pay only $595, or 56 percent as

much out of pocket.

As with the other end, seniors without a chronic condition but

with insurance coverage spent almost 70 percent more for prescriptions than non-covered beneficiaries, although their out-of-pocket

expenses are only about half as much.

From the data available, it is not possible to determine the appropriate level whether or not some individuals are spending too

much and others too little. But what we have been able to look at

through some of the research is that non-covered beneficiaries with

hypertension were 40 percent less likely to purchase anti-hypertension medication, and we have also shown that about threefourths of drug-related hospitalization by seniors could have been

avoided with the proper use of medications.

Rural populations tend to face exacerbated access and financial

problems, with other half of senior residents living at 200 percent

of the poverty level compared to 41 percent.

All of these are problems that we are encountering within the

health care industry, and the problem, as we try, you know, to

work toward solving these problems, is to recognize what is going

to happen in a very short period of time when the elderly increase

from about 13 percent of our population to over 20 percent. And

that is going to have increasing medical—you know, in terms of

trying to make it an affordable plan.

Thank you.

[The prepared statement of Dr. Hicks follows:]

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Senator CARNAHAN. Thank you.

Dr. Zweig.

STATEMENT OF DR. STEPHEN ZWEIG, DEPARTMENT OF

FAMILY AND COMMUNITY MEDICINE, UMC

Dr. ZWEIG. Thanks, Senator Carnahan, for this opportunity to

testify before this Special Committee on Aging. This is an important problem, and we hear your genuine concern and appreciate

that.

I am privileged on a daily basis to work with older people, to

help to teach medical students, residents, fellows in geriatrics and

others about the importance of caring for elders and how to do that

in a cost-effective way. I don’t know how I can speak more

articulately about this program than those patients and family

members that have come before me. It is a serious problem.

The Congressional Budget Office estimates that spending on prescription drugs by Medicare beneficiaries from all sources will

equal $1.3 trillion between 2004 and 2011, and that includes

spending by beneficiaries and insurers on their behalf.

As has been pointed out previously, purchase of Medigap policies

that cover prescription drugs are expensive. They have deductibles,

high copays, and benefit caps. And as Ms. Muhleman pointed out,

these are often out of the reach of many people who need them.

Prescription drugs spending is increasing at a rate 3 times that

of professional and hospital spending for Medicare. Not only are

many patients filling prescriptions, but the cost of those prescribed

drugs is very high. In fact, the 25 most heavily advertised and promoted drugs accounted for 40 percent of the increase in retail drug

spending in 1999.

As has been pointed out, Medicare beneficiaries fill prescriptions,

86 percent did in 1995, and a Family USA study found that in the

year 2000, the number of prescriptions filled by the elderly averaged 28.5 per year, including refills.

As Ms. Sowells pointed out, it is not surprising that those people

with many chronic conditions, such as heart disease, high cholesterol, and diabetes, spend much more, over $3,000 a year out of

pocket compared with an average of $1,343.

While the majority of Medicare recipients have some form of insurance, this insurance is not adequate to cover the cost of most

beneficiaries. Unfortunately, there is little relationship between the

cost of the drug and the benefit it may afford. But the absence of

needed drugs may precipitate loss of function in the elderly, resulting in increased disability and dependency.

So, in summary, the number of prescriptions is up. The cost of

those prescriptions is up. Costs are higher for those without insurance coverage. Total expenses, however, are higher for those with

good insurance coverage, and those with multiple chronic diseases

have more need.

Unlike other insurance policies, out-of-pocket expenses for prescription drugs are unlimited in most circumstances, and as has

been pointed out, 65 percent of beneficiaries have some form of insurance and 60 percent of them have supplemental plans. Most are

employer-sponsored, but this is also decreasing. The statistic that

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I had read included only 30 percent of elderly with employer-sponsored plans in 1998.

Twenty percent are members of Medicare HMOs, which have historically had the most generous prescription drug coverage, but

more recently they have limited these benefits. And as Mr. Lakes’

experience testifies, high prescription drug users are more likely to

disenroll from Medicare HMOs and may not qualify now for their

former Medigap plans, leaving them without any coverage at all.

As has been also pointed out, those most likely to be without coverage have low income, to be of fair or poor health status, and to

be older than 75. And even though the Medicaid program covers 17

percent of elderly living in the community, a very, very fine prescription drug program, many poor people don’t receive Medicaid

benefits. In fact, in 1999, an estimated 45 percent of community

living Medicare beneficiaries within incomes below the Federal poverty level received no Medicaid benefits.

Dr. Hicks has articulately described the population trends. Our

population is aging. By 2020, 20 percent of Americans will be 65

and older, and the largest growing population in the United States

is that in the 85-year-and-older group. As our population ages, the

prevalence of chronic disease will also increase, which means more

prescription drug use and higher costs.

Valuable pharmacologic research is fueled by a promise of a drug

that will be preferred by both patients and physicians, and it will

be expensive. While Medicare has limited payments to physicians

and hospitals, there has been no such limit on the cost of prescription drugs.

I have a nurse colleague in our practice named Rebecca Raskar

who coordinates the care for about 230 of the most frail and complicated older patients that we care for living in the community.

And I asked her this morning what I should tell this group, and

she said, ‘‘Tell them these poor old people can’t afford those expensive drugs.’’

Indigent drug programs that are sponsored by pharmaceutical

companies are valuable, but they are full of gaps and delays, and

they are incomplete. Frequently, our patients and us cobble together programs which are associated with discontinuity and possible injury, and I will be happy to give examples.

Drug samples are free at first and costly much later. As Mr.

Lakes pointed out, they are not available long term. And the Medicaid spend-down program has helped many, but is not available to

all those who need it.

I will stop there.

[The prepared statement of Dr. Zweig follows:]

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Senator CARNAHAN. Well, thank you very much, Dr. Zweig.

Dr. Hicks, in your testimony, you said that those without a prescription drug benefit fill fewer prescriptions than those who do

have those benefits and that this might indicate that people are not

filling prescriptions, not taking the medicines that have been given

to them. And we have seen some examples of that already today

of people having the medicine or only taking it every other day.

What are the possible health implications of this kind of behavior?

Dr. HICKS. Well, I think we have seen—part of it, as you look at

some of the research, if you cut your medication in half, you know,

someone said that, well, maybe the—their view was that, well, at

least it would give them half of the benefit. Oftentimes medications

if taken in half give no benefit because the dosage is given at a

point that is needed to make the difference, and if you don’t take

it at that dosage, you really don’t get any benefit.

I think we see it where the hypertension that took 40 percent

fewer prescriptions, we then see an increase in strokes, heart problems, and very expensive hospitalizations because they haven’t

been able to afford the preventive type of care.

Senator CARNAHAN. And what would you recommend, then, for

those people who simply can’t afford to have their prescription refilled?

Dr. HICKS. I think it is the same thing we have been talking

about of trying to get some type of an affordable prescription drug

benefit so that everyone has the basic coverage as an elderly individual as part of a Medicare plan.

Senator CARNAHAN. Some are fearing that if the Government

provides a Medicare drug benefit, private employers will tend to

scale back and not provide programs. In fact, there are already

some indicators now that they are beginning to cut back on coverage.

I was wondering if both of you would comment on this trend and

how you believe the creation of a Medicare drug benefit would impact the private sector.

Dr. HICKS. I think we are already starting to see the private sector cut back on the packages that they make available for their retirees. You know, there is a lot of data already out there that

shows this is happening, and it is happening without the protection

of the Medicare program to pick up the difference. It is falling on

the individual to make up that difference as the private companies

cut back.

Yes, I think the answer is we probably would see private insurance companies cut back if Medicare—very similar to what we have

seen as Medicare has picked up other costs.

Senator CARNAHAN. You don’t think they would offer a supplemental of some kind, they would just let it go?

Dr. HICKS. There is obviously the potential to offer a supplemental like our Medigap programs that will help pay for the

deductibles and copays. I think on your prescription drugs, just because, you know, the large number and the increasing expense of

those packages that would be—they would be less inclined to offer

the supplemental.

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Senator CARNAHAN. I was wondering if you would comment, Dr.

Zweig, on the advantages and disadvantages you see of a drug benefit under Medicare as opposed to private insurance.

Dr. ZWEIG. Obviously not everyone has private insurance now, so

that would be certainly a major difference. I think this is an incredibly tough problem, and anything that we do will be very expensive.

As we look at the costs of administering health programs, the

cost of administering the Medicare program has historically been

much less than that associated with other private insurance programs. I am not a health economist like Dr. Hicks, and I can’t predict what employers or health insurers will do. I support universal

health insurance for everyone in this country and I believe that——

[Applause.]

Senator CARNAHAN. I think you have an audience that agrees

with you.

Dr. ZWEIG. I believe that as we try to take money out of different

pockets, as we are constantly doing, in trying to care for people,

and particularly older people, not only with regard to drugs but

with regard to long-term care and hospital care and home care, it

becomes very complicated.

I think that we will need to replace the existing support for the

two-thirds of the population if we go with a universal Medicare

plan, and those who are contributing to those existing plans will

have to contribute in some way.

I think that we have to do something first for those people who

have greatest need.

Senator CARNAHAN. Let’s move on to something that affects people who live in rural areas, and I think they have certain special

problems in many areas, access problems and certainly access to

prescription drugs is one of those. And one of the principles that

we laid out early on regarding a benefit was that it should be accessible so that all beneficiaries, no matter where they live, have

access to prescription drugs.

What do you see as the challenges in providing prescription drug

benefits in rural areas? Either one of you, or both.

Dr. HICKS. I think obviously one of the problems we have is the

same problem we have with all other health care, is just availability of the medications. Especially if a rural elderly takes a medication that is somewhat unique and different and rare, it becomes almost impossible to get that in a local pharmacy because of the

problems they have of getting it and keeping it and the low volume.

So I think that is going to be an area that we really have to worry

about with our rural elderly, is the lack of volume in a lot of the

different kinds of medications and getting that in.

Dr. ZWEIG. Just to add to that, rural practitioners tend to be the

most overwhelmed of all. We have been very fortunate to have social workers within our program who help people to sign up for indigent drug programs which have afforded them some services that

they may not have otherwise had.

The transportation to accessible pharmacies at low cost is a challenge. If people like Mr. Lakes need to get their prescriptions every

2 weeks because they can’t afford it, that certainly adds a tremendous challenge to being able to get a 3-month supply of medications

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that will both reduce the cost of those drugs and also make it more

likely that the person won’t have gaps in their treatment.

I think people are less likely to take those drugs for which they

see a direct positive effect, and they may not be the ones that are

the best ones to choose to not take.

Senator CARNAHAN. On the affordability side—again, I have

asked this of some of the other panels as well—how can we make

a benefit that is both attractive and affordable? I would like to

have your opinion on that as well.

Dr. HICKS. I guess my response is I really don’t know. The affordable part of it, with all of the new drugs coming on the market that

are extremely expensive, the growing elderly population is going to

make it hard to make it affordable.

I think one of the difficulties we always face with any kind of

governmental insurance program is that it can become an easy target, because suddenly we have the information in front of us about

what it is actually costing because it is a Government program,

and we avoid some of that in the private. It doesn’t make it any

less affordable. It just makes it less of a target to be able to hit.

And so I think trying to find an affordable one is doing things

that you talked about earlier, and that is, I think it will be necessary to have some type of copayment and to have some type of

deductible. I would, however, really not like to see any kind of cap

put on it, saying a maximum benefit, because unfortunately what

you do with a maximum benefit is you max out the people that

need it the most, and those are the ones that are spending the

most. [Applause.]

Senator CARNAHAN. I might move on to another point that we

mentioned, that is, the point of stability. It seems like the seniors

get to where they are relying on a program, and it is very unsettling to have the coverage change. So I was wondering if you might

comment on how we can best create a drug benefit that is stable

and one that is reliable as well.

Dr. ZWEIG. Well, that is clearly the advantage of doing it through

the Medicare program instead of a private insurer in terms of that

stability. It seems to me any plan is going to need to include some

combination of deductibles and out-of-pocket limits and premiums.

I think there has to be meaningful price reform with regard to expenses and costs for drugs. I think—— [Applause.]

Senator CARNAHAN. You have got a real following here.

Dr. ZWEIG. Yes. I think we have to be careful to not divert support to prescription drugs away from other aspects of the Medicare

program. I think the formulary has to be comprehensive but evaluated by health care providers who know most about that. And I

think that we should support drugs in particular that target significant symptoms and prevent disability in older people.

I am concerned that if we only have a program that supports the

poor that the program will become a target, as the Medicaid program has become in political circles. And, honestly, I am concerned

about the recent economic forecasts as to how much money we will

have for such a program. And I applaud your interest in continuing

to try to pursue this very great challenge.

Senator CARNAHAN. One of the things that you mentioned earlier

was the use of drug samples. It seems like doctors will often, in all

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good intent, provide these samples for someone with a chronic

health problem, and they use it for a month or so, and they get

committed to the drug, and then it is a very expensive drug for

them to follow up with.

Are there ways that we can educate our seniors and their caregivers to consider these cost issues up front when they are setting

up a treatment program?

Dr. ZWEIG. I think this is an incredibly important problem. You

know, in general, the samples left in physicians’ offices are the

newest and most expensive ones. Some of those are very valuable

drugs for which there is no alternative. Many of them are not. Advertisements for these drugs help to support medical journals and

provide a lot of the costs for supporting education and continuing

education.

Most recently, as you know, these drugs have been now prescribed on television and on radio, so patients come to me on a

daily basis saying, ‘‘Why aren’t I on this one?’’ And they are always

among the most expensive drugs available.

I do think that patients need to be informed, but the effect of the

advertising and the unfiltered attention of the media to the promises of medical science, the cure of cancer of the month, has created

incredible expectations that we cannot meet at this point.

I think our job as physicians is important. We have to make sure

that our patients are taking the drugs that show really the most

demonstrated benefit and to negotiate with them about that. And

what we are trying to do in medical school and residency training

is to help our students evaluate new information and practice in

an evidence-based way so that they can then communicate that effectively with patients. And we have to be familiar with costs. I

mean, it is inexcusable for physicians to say, ‘‘I don’t know what

that drug is going to cost’’ and not put that into the context of their

prescribing plan. [Applause.]

And in the process, then, engaging patients and making those

kinds of choices about—and there is a creative program that I just

learned about in Ohio a couple of days ago using some of the same

techniques of pharmaceutical sales representatives, where it is an

organization called Generics First. A generic drug company is going

around and spending time with physicians informing them about

cost comparisons of drugs and helping them to learn the least expensive alternatives. And I think that that is incredibly important.

This is a program that some researchers at Harvard discovered a

few years ago. If we help to train physicians about those things,

they can help their patients as well.

Senator CARNAHAN. Well, thank you very much. We are about to

run out of time, and I was determined that we would be able to

finish here at noon. But I appreciate your being here very, very

much, and I want to thank you for sharing this with us. I will

make a closing statement, and we will adjourn for the day.

But before we adjourn, I want to thank all the witnesses who

have been here to share their thoughts and their opinions with us

on the problems of prescription drug costs.

For those of you who have other thoughts on the subject and

would like to share them with me, there is a table out in the hall

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where you can write comments, and I will take those back to Washington with me and read those and get back with you.

I think you have conveyed a very clear and a very forceful message today. We need a prescription drug benefit under Medicare,

and we need it now. [Applause.]

This benefit should be universal, that is, it should cover every

Medicare recipient who wants to participate; and it should be affordable, and it should be available to all. And it should be something we can rely on for many years into the future.

I will be returning to Washington next week following the Labor

Day break, and we will begin to struggle to craft a prescription

drug benefit that works. It will be a difficult battle because we are

in tight budgetary times. But I assure you that I will remember

what has been said here today, and I will see that those in Washington know what you think.

I want to close by reading a portion of Mrs. Ruengert’s very fine

written testimony that she submitted for the record. I mentioned

it earlier. She is caring for her 91-year-old aunt in her home. Her

aunt, Mrs. Dorothy Creighton, lost her husband some years ago.

Mrs. Creighton was able to live by herself for a while before her

own health began to fail. And at this point, she sold her house and

she spent her savings to move into an assisted living home, where

she stayed for several years until her expenses became too burdensome.

Because of the rising costs at the home and rising cost of medical

expenses and her reduced savings, she could no longer afford the

arrangement. At this point, Mrs. Ruengert invited her aunt to live

with her in Jefferson City, and in testimony submitted to this committee, Mrs. Ruengert writes, and I quote, ‘‘Even with my help,

things are financially hard for her. She didn’t want to tell you that

she was overdrawn at the bank 3 weeks ago when she sent a check

to AARP to pay for medicine. But I told her this committee needs

to hear about all your financial problems due to your medical bills.

I ask you, What do the elderly do when they have no family member who can help them?’’ Yes, what do the elderly do when they

have no family member to help them? That is a haunting question,

and that is the question I am going to take back to Washington

with me because that is the question we need to find the answer

to.

This hearing stands adjourned. [Applause.]

[Whereupon, at 11:45 a.m., the committee was adjourned.]

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