News Release

Pharmaceutical Drugs: Mergers and Medicare

Pfizer Inc. announced today that it plans to buy Warner-Lambert Co. for $90 billion in stock in a deal that creates the world’s second largest pharmaceutical company. Meanwhile President Clinton and others are putting out proposals on Medicare. The following analysts are available for interviews on these and other subjects related to the pharmaceutical industry:

SIDNEY WOLFE, M.D.
Director of Public Citizen’s Health Research Group, Dr. Wolfe said today: “This would be the 29th significant merger in the pharmaceutical industry in the last decade. There is no evidence that the economies of scale have resulted in price savings to consumers — quite the contrary. Also, there is no evidence that more research will come out of the combined companies than the two individually. Finally, there is the corruption of the political process; stronger pharmaceutical companies can push through legislation like patent extensions and put more pressure on the Food and Drug Administration.”
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JOHN HESS
A policy analyst on economics and aging issues and a former reporter for the New York Times, Hess said today: “All the Medicare proposals — from Clinton, Gore, Bradley as well as the Republicans — refuse to address the question of price controls for pharmaceutical drugs. Also, they don’t really cover the total bill, they just allow someone to buy insurance and that only covers part of the cost of the drugs. We have people going across the border to Canada to buy their medication. What’s needed is to put a limit on what these companies are charging. The government gives them a monopoly through the patent system, and so they can pretty much charge anything they want to. Also, the government provides a large part of the research funds. For us retirees who are already covered for some of our pharmaceutical bill, the current Medicare proposals let our employers off the hook.”

DEAN BAKER
Co-director of the Center for Economic and Policy Research and co-author of the newly released “Social Security: The Phony Crisis,” Baker said: “The merger is just going to mean higher drug prices and less research. It’s hard not to believe that one of the ways that they’re going to economize is to reduce research where they overlap. There will be higher drug prices because there will be less competition. The pharmaceutical companies want prescription coverage in Medicare as long as it doesn’t affect their pricing power; they’ll be very happy since that just means more customers, but that will be incredibly expensive for us. The question is, will Clinton set up some kind of federal buying entity to keep prices down?”
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For more information, contact at the Institute for Public Accuracy: Sam Husseini, (202) 347-0020; David Zupan, (541) 484-9167