Although the American taxpayer has paid for a considerable part of the development money for U.S. prescription drugs, the pharmaceutical companies are able to patent these drugs and establish artificially high retail price for them. And unless you are a "Most Favored Customer" of the pharamceutical industry that is the price you will pay for the drug.

In October 1999, President Clinton directed the Department of Health and Human Services to undertake a study of U.S. prescription drug prices, and this report was completed in April 2000. The report was highly detailed and presented a lot of valuable information. At one time, the more responsible newspapers in the Mainstream Media might have summarized and simplified this information into a series of understandable reports on topic affecting most Americans. But these days the self-perceived role of the Mainstream Media is to protect the powerful and the privileged, not to provide information that might cause the American People to stop and think and then possibly understand what is going on.

But the report did contain the information answering one important question -- How are the FINAL PRICES of prescription drugs determined in this country?

There can be up to five parties to each transaction: (1) the drug companies, (2) the wholesalers, (3) the retailers, (4) the insurers, and (5) the consumers. But the government cannot legally penetrate one vital ingredient of the pricing mechanisms linking these parties -- the rebate arrangements which are "private and confidential." So the American People and the United States government can only look at two things, the retail price of the drug, and the final price of the drug to five different kinds of prescription drug users.

This Real World pricing system effectively separates the consuming public into two groups, one privileged, one not -- the pharmaceutical industry's "Most Favored Customers" and those who must pay the retail prices for prescription drugs. To see how this highly complex pricing system works, consider a prescription drug with a list price of $50, and then look at the five FINAL PRICES.

(1) Retail price = list price of $50 MINUS 20% ($10) EQUALS $40, PLUS a retail markup of $12 (30%) EQUALS FINAL PRICE OF $52

(2) Prescription drug insurers = list price of $50 MINUS 20% ($10) EQUALS $40, PLUS a retail markup of $12 (30%) EQUALS $52. MINUS rebates ranging from 12% ($6.24) to 40% ($20.80) = FINAL PRICE RANGE of $31.20 to $45.76.

(3) HMOs buying directly from manufacturer = list price of $50 MINUS 33% ($16.50) = FINAL PRICE $35.50 (on average)

(4) Medicaid = list price of $50 MINUS 20% ($10) EQUALS $40, PLUS a retail markup OF $12 (30%) EQUALS $52. MINUS rebates ranging from 15% ($7.80) to 30% ($15.60) = FINAL PRICE RANGE $36.40 to $44.20

(5) General Services Administration (GSA) Catalog of prescription drugs for military consumers, active and retired: (VA, Military Hospitals, etc.) = list price of $50 minues 52%= FINAL PRICE $26

H.R.4646, The Prescription Fairness Act was introduced on September 26, 1998 by Rep. Turner (D-TX) and 64 other Democratic Representatives. HR.4646 was an attempt to provide for substantial reductions in the price of prescription drugs for Medicare beneficiaries. In introducing HR.4646, Representative Turner cited two examples: For Ticlid, a stroke medication, the "most favored" customers paid $33.57 for a typical prescription; a month's supply of Ticlid. The average retail price paid in Turner's Second Congressional District of Texas, was $117.95, over three and one-half times as much. Synthorid, a hormone treatment, had a price difference of 1350 percent. The "most favored" customers were paying $1.78 for the prescription, while the senior citizens in the Second Congressional District were paying the retail of $25.86, fourteen and one-half times as much.

HR.4646 was referred to the House Ways and Means and House Commerce Committees on September 26, and killed there in the usual Republican-controlled subcommittees on September 30, 1998.

On October 10th, 1998, H.R.4794, the Fairness in Prescription Drug Prices Act was introduced by Rep Robert S. Cramer (D-AL) A bill to provide for substantial reductions in the price of prescription drugs for Medicare beneficiaries. Specifically, HR.4794 would have allowed any HHS-qualified pharmacy to purchase any covered outpatient drug listed on the Federal Supply Schedule of the General Services Administration at the GSA discount price for that drug, and in the quantities required for sale to Medicare beneficiaries.

On February 10, 1999, Representative Thomas H. Allen (D-ME) and 152 co-sponsors introduced HR.664, which would allow pharmacies to buy prescription drugs from the government (at list price minus 52%?), thus significantly lowering the retail prices charged older Americans.

HR.4794 and HR.664 were highly dangerous to the Health Care Industry -- they would have destroyed the entire pricing structure for prescription drugs then existing in the United States. This in turn would have triggered the destruction of the lucrative prescription drug insurance schemes and the mail order monopoly markets of the HMOs and the health insurance companies. Both bills were therefore rapidly killed and buried in the usual Republican-controlled sub-committees of the House Ways and Means and Commerce Committees, HR.4794 in October 1998 and HR.664 on February 10th, 1999.