Patients and Taxpayers Pay the Price for Drug Co. & Insurer Waste and Profiteering

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Santa Monica, CA — A report released yesterday found that by 2014 taxpayer-funded programs will account for half of total U.S. health care spending because President Bush and Congress have failed to address waste and profiteering in the health care system, according to the Foundation for Taxpayer and Consumer Rights (FTCR).

“If President Bush really wanted to keep health care affordable he’d force health insurers and drug companies to stop gouging instead of passing the buck to patients and taxpayers,” said Jerry Flanagan of FTCR. “President Bush and Congressional Republicans would rather cut health care budgets than upset their biggest campaign contributors.”

The report, released on Wednesday by the Centers for Medicare and Medicaid Policy, also noted that as a result of the new Medicare prescription drug benefit, Medicare prescription spending will increase to $69.6 billion, or 28% of total prescription drug spending, in 2006. Under pressure from the pharmaceutical industry, President Bush and the U.S. Congress opposed bulk purchasing in the 2003 Medicare prescription drug law, which banned the 41 million-member Medicare program from negotiating volume discounts with pharmaceutical companies.

FTCR noted two key areas for reform:

* As a result of excessive administrative waste and inefficiency, executive salaries, and double-digit profit increases, HMO and health insurance overhead costs have become the fastest growing component of health care spending.

The recent acquisition of HMO Blue Cross of California’s parent company, WellPoint, by Anthem provides a vivid example of health insurer largess. Under that merger agreement, company executives awarded themselves hundreds of millions of dollars in bonuses to be paid for out of the pockets of patients. Click here for more information.

* A report based on analysis of drug companies’ SEC filings and annual reports, found on average that companies spend 2-3 times more on marketing, advertising and administration than they do on research and development (R&D).

FTCR sponsored two chartered train trips, dubbed the Rx Express, that took uninsured and underinsured patients, small business owners, and seniors from throughout the West and East Coasts to Canada to buy lower cost prescription drugs. Drug prices are 30-70% lower in Canada than in the U.S. because Canada, like the U.S. Department of Veterans Affairs, negotiates bulk discounts on behalf of all residents. Rx Express rider’s saved an average of $2000 on the prescription drugs they purchased in Canada. For more information visit:

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FTCR is the state’s leading non-profit and non-partisan consumer advocacy organization. For more information, visit us on the web at

Consumer Watchdog
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