WHEREAS:
Between 2005 and 2009, the prices of the most widely used drugs rose by nearly 25 percent, which was almost twice the rate of inflation. By 2017, prescription drugs are projected to cost 138 percent more than what they cost in 2006; HHS projects U.S. prescription drug spending to increase from $234.1 billion in 2008 to $457.8 billion in 2019, almost doubling over this 11-year period; and

WHEREAS:
From 1999 to 2009, the number of prescriptions increased 39 percent (from 2.8 billion to 3.9 billion), compared to a U.S. population growth of 9 percent; and

WHEREAS:
Prescription drug spending is also typically reduced when brand name drugs lose patent protection and face competition from new, lower cost generic substitutes. For products with a large number of generics, the average generic price falls to 20 percent of the branded price and lower. However, in efforts to stem any competition from generic manufacturers, a number of pharmaceutical companies have been sued for paying off generic manufacturers not to bring their less expensive generic drugs to market at a cost of $4.5 billion to our members and consumers throughout the country; and

WHEREAS:
In 2009, manufacturers of brand name drugs spent over $10.9 billion in directly advertising their brand name drugs to consumers, including offering discount coupons off co-pays for brand name drugs. Over the next decade, it is estimated that these coupons alone will increase prescription drug costs for benefit plans and health insurers by $32 billion; and

WHEREAS:
Pharmaceutical manufacturers were and continue to be among the nation’s most profitable industries (profits as a percent of revenues). They ranked 3rd in profitability in 2003 and 2004, 5th in 2005, 2nd in 2006, and 3rd in 2007 and 2008, with profits of 19.3 percent in 2008; and

WHEREAS:
Prescription benefit managers (PBMs) administer prescription drug benefits for many union plans. PBMs advertise that their interests are aligned with our benefit plans’ interests. However, most PBMs refuse to allow their contracts with our benefit plans to be thoroughly audited; they refuse to agree to true pass-through pricing and they refuse to operate in a transparent manner where all their profits are disclosed. Their fees and undisclosed profits add to the cost we all pay for prescription drugs. However, PBMs are largely unregulated. PBMs are only accountable to their shareholders and they having been making historic, excessive profits at the expense of our benefit plans and ultimately at the expense of our members and their families; and

WHEREAS:
If members, retirees and their dependents were educated by their union through wellness programs about healthier lifestyles, in some cases, they could avoid having to go on prescription drugs; and

WHEREAS:
It is extremely difficult for most union benefit plans to manage their prescription drug benefit for their members without utilizing the services of a PBM. Over the years the number of PBMs that administer union prescription drug benefits has continued to shrink as PBMs merge into even larger PBMs, thereby becoming a monopoly. As these merged PBMs grow larger and control more of the market, they are less willing to do business with our benefit plans in an above board, transparent manner; and

WHEREAS:
The lack of any real competition among PBMs is being further threatened by the continued unchecked constriction of the PBM industry. The Federal Trade Commission (FTC) recently voted to permit the merger of Express Scripts, Inc. (“ESI”) with MEDCO, thereby permitting the creation of a mega-PBM that will control an alarming portion of the prescription drug business in this country, particularly in the areas of providing specialty drugs and mail order drugs. Dissenting FTC Commissioner Brill voted to oppose this merger and recommended that the merger be re-examined in three years. Because this newly-merged, publically-traded mega-PBM will have a monopoly over specialty drugs — the fastest growing and most expensive segment of the prescription drug industry, FTC oversight of the merger should continue; and

WHEREAS:
Presently one of the ways to counter the unfair and undisclosed profits that PBMs and the pharmaceutical industries are making from our members’ prescription drug needs is to create multi-state purchasing coalitions among union benefit plans and other providers. Such coalitions, which should be expanded to nationwide coalitions, can use their size to exert leverage on drug manufacturers to offer lower costs through bulk purchasing and by aggressively contracting for more deeply discounted pricing; and 

WHEREAS:
AFSCME has been a leader in the fight to reform the prescription drug marketplace through legislative activity, by aggressively negotiating auditable, transparent, pass-through contracts that provide real guarantees on drug pricing, by providing member education and by filing lawsuits against drug manufacturers and pharmacy benefit managers.

THEREFORE BE IT RESOLVED:
That AFSCME continue its leadership role to reform the prescription drug marketplace by sharing its expertise with its affiliates in the areas of legislation, contracting practices, member education, including providing information about wellness programs and litigation by disseminating information on the best practices and strategies in each of the above areas through a “drug task force” or by any other means; and

BE IT FURTHER RESOLVED:
That AFSCME and its affiliates should actively campaign through legislation, collective bargaining and lobbying to pressure city, county, state and federal governments to form purchasing coalitions in order to lower and hold down prescription drug 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 the means to offer 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 encourages all of its affiliates to do extensive membership education on the value of generic drugs in holding down prescription drug costs, on how pharmaceutical manufacturers continue to push more expensive brand name drugs and on why brand name drug costs are so high and continue to rise at a faster rate than the rest of the economy; 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 work with its affiliates and others that provide prescription drug benefits to its members/retirees and their families to create purchasing coalitions in order to obtain the lowest possible prices for prescription drugs for all their covered participants; 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 consumers; and 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:
Eddie Rodriguez, President and Delegate
Ralph Palladino, 2nd Vice President and Delegate
AFSCME Local 1549, District Council 37
New York

Stuart Leibowitz, President and Delegate
District Council 37 Retirees Association
New York

Sirra Crippen, President
AFSCME Local 1507, District Council 37
New York