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More drug deals at the consumer's expense

By Maxine Shapiro, KERA 90.1 business commentator

Dallas, TX – Now the FDA is going to crack down on medications that come from Canada. So while it's busy "cracking down," we have to continue to pay higher prices - as rebates are being stuffed into the pockets of everybody but the consumer. I'm Maxine Shapiro with KERA Marketplace Midday.

Boy, does this get my goat. Did you know that you could save up to 80% on prescription drugs from Canada, either through the Internet or by traveling there? 80% seems a little high to me. I'd do it for a 20% discount. So why the price discrepancy? First of all, Canada has a much different health care system than we do. Even when it comes to the well being of our citizens, profits come first. We're also told a lot has to do with research and development. That's fine. But when I read about one of the largest managers of prescription drug plans receiving more than $3 billion in rebates, my threshold of understanding gets greatly reduced. The company is Merck-Medco Managed Care. You might know them simply as Medco.

The New York Times revealed this figure after it received photocopies of documents that had been under court seal during a long-running class action lawsuit. In the late 1990's, drug makers were seeking to promote sales of certain drugs - the very expensive kind. Medco, a unit of Merck and Company, and I'm quoting the New York Times here, "persuaded doctors to switch more than 71,000 prescriptions from Lipitor - a cholesterol treatment from Pfizer - to Zocor, a competing, more costly drug from Merck." And that's according to Merck-Medco's own records referred to in the court documents. Merck-Medco has not denied any of these figures.

Here's another twist: when a drug plan manager like Medco is hired by employers to handle prescription drug benefit plans, they use a collective buying power. This power enables them to negotiate discounts and rebates, for the plan manager, from the drug makers. This way certain medicines are promoted based on co-payments and prices. You know, that "preferred drug list." It's all about the relationship they have with the drug makers. So why isn't the FDA cracking down on this? For KERA Marketplace Midday, I'm Maxine Shapiro.

Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m.

Email Maxine Shapiro about this story.