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Pfizer, the world’s largest drug maker, announced on Thursday that it is unveiling a new program that will let people who have lost their jobs and health insurance to keep taking Pfizer medications — for free, and for up to a year. The company will provide more than 70 of its prescription drugs ranging from Viagra to Lipitor at no costs to unemployed and uninsured Americans who lost their jobs since Jan. 1 and have been taking Pfizer drugs for me than three months. It is not clear how much Pfizer will spend on the program and whether or not costs will be capped.

The announcement comes amid massive job losses caused by the recession and a campaign in Washington to rein in health care costs and extend coverage. The move could earn Pfizer some goodwill in that debate after long being a target of critics of drug industry prices and sales practices. The program also likely will help keep those patients loyal to Pfizer brands. Don't be surprised if other pharmaceutical companies announce similar program over the next few weeks.

Pfizer and the rest of the drug industry wants is trying to have a voice in the debate over how to overhaul the U.S. health care system, partly by joining in a pledge this week to help hold down inflation of health costs. In the mean time, drug companies have been raising prices on their drugs, partly to offset declines in revenue as the global recession reduces the number of prescriptions people can afford to fill.

Pfizer ought to be commended on the program and its concern for the health and well being of unemployed and uninsured Americans. However, it is important to point out that this is little more than a high profile, marketing campaign designed to improve the image of drug makers. More important, it is the first public acknowledgement that drug makers are willing to engage legislators in discussions about how to reform healthcare to reduce costs and cut expenditures. 

What really is at stake here is whether or not the US government will begin regulating drug prices as part of a comprehensive healthcare reform package. As many of you may know, the US government, unlike most other governments in the world, cannot negotiate or set prescription drugs prices. Not surprisingly, the US prescription drug market is the largest and most profitable in the world. It will be interesting to see how the US healthcare reform discussion unfolds—clearly a lot is at stake for the American prescription drug industry.

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Health care spending in the United States grew 6.7 percent in 2006 to $2.1 trillion, or $7,026 per person. This represents a slight increase over the 6.5 percent rate in 2005 (which was the slowest growth since 1999). Health spending accounted for 16 percent of US gross domestic product in 2006, outpacing overall nominal GDP growth by 0.6 percent. However, total health care spending in the US is not the real story here.

The federal government reported that the new Medicare drug benefit called Part D, which was implemented in early 2006, contributed to an 18.7 percent increase in Medicare spending that year, the fastest rate of growth since 1981 and double the rise in 2005.  In 2006, Medicare spending rose to $401.3 billion, up from $338.0 billion a year earlier, according to the government’s annual health spending report.

The impact on funding sources that paid for prescription drug benefits varied. The public share of spending (federal and state)  increased from 28 percent in 2005 to 34 percent in 2006, while funding from private sources (insurers) fell from 72 percent to 66 percent.  The shift in funding was most dramatic for Medicare and Medicaid. Medicare’s share of total retail prescription drug spending surged from just 2 percent in 2005 to 18 percent in 2006, following Part D implementation. Meanwhile, Medicaid’s share fell from 19 percent to 9 percent.

At present, the US government cannot negotiate prescription drug pricing with drug companies that produce the medications–only drug distributors and third party insurers can do that! As the baby boomer retirement continues, the amount of government spending on prescriptions drugs will increase exponentially and ultimately cause healthcare costs in this country to explode. In my opinion there are two options: impose price controls on prescription drugs or provide all US citizens with a national healthcare system that allows the government to negotiate drug pricing directly with drug manufacturers. And for those of you who think national healthcare is a fantasy–over 60% of all healthcare claims in the US are currently handled and paid by Medicare–a federally finaced and run government healthcare system!  We are closer to a national health insurance program than you think!

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Good Luck and Good Job Hunting!!!!!!

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