WHEREAS:

Prescription drug costs increased an average of 16 percent in 2003. Prescription costs continue to be one of the fastest growing components of health care costs; and

WHEREAS:

The pharmaceutical industry has been the most profitable industry in America for each of the past 10 years, with profits averaging 18.5 percent over that period. In 2001, it was five-and-one-half times more profitable than the average for Fortune 500 companies; and

WHEREAS:

In 2001, the pharmaceutical industry spent 27 percent of its operating budget on marketing, advertising and administration, but only 11 percent on research and development; and

WHEREAS:

Medications purchased from Canadian pharmacies cost 30 to 80 percent less than the same medications purchased in the U.S. Canadian drug prices are not unusual; they are comparable to those in most other industrialized nations. The U.S. is the only industrialized country without some form of pharmaceutical price controls and, in most cases, the federal government is legally prohibited from using its purchasing power to negotiate discounted pharmaceutical prices; and

WHEREAS:

At least three local governments have implemented re-importation programs resulting in savings of up to 40 percent. Several states have conducted studies that found that Canada provides safety protections substantially equivalent to those in the U.S. Some states have set up web sites that help people order prescription drugs from Canada; and

WHEREAS:

Multi-state purchasing coalitions have demonstrated that leverage can be exerted on drug companies to offer lower costs through bulk purchasing; and

WHEREAS:

AFSCME has been a leader in the fight to reform the prescription drug marketplace through legislative activity and by filing lawsuits against drug manufacturers and pharmacy benefit managers; and

WHEREAS:

Senior citizens spend more on prescription drugs than younger people, but the new Medicare law, enacted in November 2003, provides a skimpy private-insurance drug benefit with big coverage gaps; prohibits Medicare from using the buying power of its 40 million beneficiaries to negotiate lower prices with the drug companies; risks cancellation of employer-paid health plans for an estimated three million retirees due to the law's inadequate employer subsidies (particularly inadequate for public sector employers who can't take advantage of the law's tax credits); and won't go into effect until 2006; and

WHEREAS:

The new benefit will be preceded by a temporary program of Medicare-approved drug discount cards -- available in June 2004 -- which are sponsored by private pharmaceutical benefit managers (PBMs). Each card will cost $30 a year, be restricted to one card per senior, offer limited drug choices, and provide discounts of only 10 to 20 percent, with no guarantee that all PBM discounts will be passed along to seniors; and

WHEREAS:

The combination of new business for drug manufacturers and the absence of any significant measures to contain drug prices, means the new law will deliver an estimated $139 billion in additional profits for the drug industry -- already the most profitable industry in the world.

THEREFORE BE IT RESOLVED:

That AFSCME work to replace the drug benefit in the new Medicare law with one that does not have huge gaps in coverage, is provided by Medicare itself rather than private insurance, allows Medicare to bargain with the drug companies for lower prices, and provides more incentives for employers -- public and private -- to maintain the comprehensive health care benefits they currently offer their retirees; and

BE IT FURTHER RESOLVED:

That AFSCME and its affiliates should actively campaign through legislation, collective bargaining and lobbying to pressure city, state and federal governments to form purchasing coalitions so as to be in a better position to hold down costs; and

BE IT FURTHER RESOLVED:

That AFSCME should provide policy research (especially information about innovations and best practices in containing drug costs), training and political action support, to assist its affiliates in collective bargaining and state legislative campaigns; and

BE IT FURTHER RESOLVED:

That AFSCME should provide administrative training and technical support to elected leadership, benefit fund trustees and managers responsible for prescription drug benefits and/or insurance for union members and retirees; and

BE IT FURTHER RESOLVED:

That AFSCME work with affiliates to work proactively in their pension systems to put forth corporate governance positions that support affordable drug prices; and

BE IT FURTHER RESOLVED:

That AFSCME continue its efforts to enact prescription drug cost-containment measures, including federal restrictions on direct-to-consumer advertising by pharmaceutical companies; re-importation programs at the federal, state and local levels; requiring pharmacy benefit managers to act in the best interest of their consumers; federal and state laws that permit state governments to negotiate lower drug prices on behalf of their citizens and litigation where appropriate; and

BE IT FURTHER RESOLVED:

That AFSCME and its affiliates work in cooperation and coalition with other unions, health care advocates, patient representative organizations, community organizations, health care institutions and politicians to achieve these ends; and

BE IT FINALLY RESOLVED:

That AFSCME give heavy weight to a candidate's position on controlling prescription drug costs in its endorsement procedures.

SUBMITTED BY:

JoAnn Johntony, President and Delegate
Sandra Wheeler, Secretary and Delegate
OAPSE/AFSCME Local 4
Ohio

Ronald C. Alexander, President and Delegate
Kathleen Stewart, Secretary/Treasurer
OCSEA/AFSCME Local 11
Ohio

Ralph Palladino, Delegate
AFSCME Local 1549, Council 37
New York