Washington, Sep 25, 2001 - This hearing today, which investigates the causes, impacts, and remedies to the nursing shortage our healthcare community is facing around the country reinforces the results of a study my office helped complete earlier this year. Produced by the California based, non-profit policy and research group the Institute for Health and Socio-Economic Policy, the study shows a strong connection between drug company mergers and the current nursing staffing crisis. The connection is one we have long suspected - one that has massive implications for our entire health care system and patients around the country. Let me review the conclusion reached in the study, “Big Pharma:” Mergers, Drug Costs and Health Caregiver Staffing Ratios.

The pharmaceutical industry continues to be dominated by a few powerful companies. The top 20 drug firms account for almost 60 percent of mergers and acquisitions. In any industry, this fact alone would send a red flag to consumers. Add the news that drug prices are expected to go up nearly 18 percent this year, and the prices of the most commonly used drugs are growing at twice the rate of inflation and you have nothing short of an emerging crisis in our health care industry.

The study I am releasing today includes a nationwide survey of hospital executives my office contacted to determine how these hospitals are responding to prescription drug price hikes. We learned that 68 percent of hospital executives believe their current staffing levels will likely worsen because of the pressure caused by increases in drug prices. In the Midwest, including the 10th District of Ohio, which I represent, that figure is even higher. Seventy-nine percent of hospital executives believe their staffing levels, or the ratio between staff and patients, will continue to widen. Even though we are in the midst of a national hospital nursing shortage, resulting in emergency room overcrowding and other problems, hospital executives expect they may layoff even more nurses!

This study concludes that rising drug prices are the primary reason for lower revenues and profits for many hospitals and managed care plans. Hospitals and health plans have, in turn, encouraged cost cutting in the form of staffing cuts and service reductions.

We already have a major nursing shortage across the country! Hospitals, nursing homes, skilled nursing facilities and other medical clinics cannot recruit enough staff to care for patients. This study shows that rising drug prices and mergers in the pharmaceutical industry will aggravate the current nursing shortage. Even as hospitals are in need of the resources to hire more staff, drug prices are squeezing hospital budgets to the extent that hospitals may actually fire the staff they currently have. This study summarizes that pharmaceutical mergers, which result in a few power players, have a catastrophic effect on the health care system. The study also contains a comprehensive analysis of the staggering economic and social effects of the pharmaceutical industry merger and acquisition binge of recent years.

Mr. Chairman, two weeks ago we saw healthcare professionals respond to victims of the horrific terrorists acts committed against our country. These health care professionals face life and death every day, ready to save lives, counsel and relieve pain and suffering. Our nation witnessed the emergence of heroes we had long overlooked, and we cannot make light of the fact that we are losing healthcare professionals – not to disaster, but to an economic crisis we can prevent.

As a member on the Committee for Government Reform, I plan to ask for hearings on this issue and work toward stronger enforcement of antitrust laws.