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Medicare drug plan locks in high prices (2)

In fact, if this can be called a government benefit plan, the benefit is not going to seniors and disabled people covered under Medicare. The legislation setting it up—the Medicare Modernization Act of 2003—ensures that the benefits go to the pharmaceuticals, already the most profitable sector of the economy, with sales in the hundreds of billions of dollars each year.
The amount people in the U.S. spend on prescription drugs has been rising at a steep rate for years—especially since the pharmaceuticals got to advertise their pills on television. By 2000, the drug companies had increased their spending on promotion to $15.7 billion a year. In 2001, the pharmaceuticals took in $132 billion in sales—20 percent more than a year earlier. About 20 drugs accounted for half the increase—reflecting the effectiveness of advertising to boost these companies’ revenues.
During this period, the rate at which drug prices increased tripled the rate of inflation. By 2002, the average senior on Medicare spent $860 a year out-of-pocket for prescription drugs, according to the Congressional Budget Office—more than what they spent on physician care, vision services and medical supplies combined.
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