Consumers for Affordable Health Care



	NEWS RELEASE FOR IMMEDIATE RELEASE CONTACT: Joe Ditre or Alison Blizard JULY 10, 2001 NEW REPORT LINKS HIGH PRESCRIPTION DRUG PRICES TO MARKETING COSTS, PROFITS, AND ENORMOUS EXECUTIVE COMPENSATION Report Refutes Drug Industry Claims That High Drug Prices Are Necessary for Research and Development Read the full report at www.familiesusa.org AUGUSTA - A new report by the consumer health organizations: Consumers for Affordable Health Care, and Families USA; refutes the pharmaceutical industry's claim that high and increasing drug prices are needed to sustain research and development. The report documents that drug companies are spending more than twice as much on marketing, advertising, and administration than they do on research and development; that drug company profits, which are higher than all other industries, exceed research and development expenditures; and that drug companies provide lavish compensation packages for their top executives. The report comes on the heels of a recent report released by both organizations that found prices rose more than twice the rate of inflation last year for the 50 most-prescribed drugs to seniors. Among the nine pharmaceutical companies examined in the report - Merck, Pfizer, Bristol-Myers Squibb, Pharmacia, Abbott Laboratories, American Home Products, Eli Lilly, Schering-Plough, and Allergan - all but one (Eli Lilly) spent more than twice as much on marketing, advertising, and administration than they did on research and development, and Lilly spent more than one and one-half times as much. Six out of the nine companies made more money in net profits than they spent on research and development last year. The report also documents profligate spending on compensation packages for top pharmaceutical executives. The executive with the highest compensation package in the year 2000, exclusive of unexercised stock options, was William C. Steere, Jr., Pfizer's Chairman, who made $40.2 million. The executive with the highest amount of unexercised stock options was C.A. Heimbold, Jr., Bristol-Myers Squibb's Chairman and CEO, who held $227.9 million in unexercised stock options. "The cost of pharmaceuticals for Maine consumers continues to climb far beyond what many can afford to pay. Every time consumer groups try to address rising costs, the pharmaceutical companies claim that the high costs are necessary to fund research and development," said Joe Ditre, Consumers for Affordable Health Care's executive director. "This report shows that, in reality, it is extremely high profits and huge compensation packages to executives that account more for high prices than investment in research and development." In 2000, the pharmaceutical industry was, once again, the most profitable U.S. industry, and profit margins in the industry were nearly four times the average of Fortune 500 companies. According to the report, three companies - Merck, Bristol-Myers Squibb, and Abbott Laboratories - received twice as much in net profits than they spent on research and development. Three other companies - Eli Lilly, Schering-Plough, and Allergan - received more money in net profits than they spent on research and development. "Consumers are no longer willing to have to choose between groceries and medications just so that others can reap such generous profits and benefits," said Ditre. The full report can be found on the Families USA website or by contacting Consumers for Affordable Health Care at 622-7045 Consumers for Affordable Health Care is Maine's largest consumer organization and advocates the right to health care for every man, woman and child. Families USA is the national organization for health care consumers. It is a non-profit and non-partisan advocate for affordable and high-quality health and long-term care for all Americans. Return to Foundation News and Publications Return to Coalition News