Sunday, April 16, 2006

That little blue pill costs GM $17 million a year

That little blue pill costs GM $17 million a year

But cutting health coverage for items such as Viagra can be difficult

Brett Clanton / The Detroit NewsApril 16, 2006

DETROIT -- The little blue pill is leaving General Motors Corp. with a very large bill.
The world's largest automaker, which lost $10.6 billion last year, is shelling out $17 million annually for impotence drugs such as Viagra and Cialis, said GM spokeswoman Sharon Baldwin.

While the so-called "lifestyle drugs" make up a small fraction of GM's overall health care costs -- now hovering at $5.6 billion each year, or about $1,500 of every vehicle it builds -- company executives often use the example to illustrate how out-of-control health care costs have become in America.

GM, which provides health care for 1.1 million employees, retirees and dependents, is the world's largest private purchaser of Viagra, the popular erectile dysfunction drug produced by Pfizer Inc., whose sales reached $1.65 billion last year. The pill is covered under GM's labor agreement with United Auto Workers, as well as benefit plans for salaried workers.

Ford Motor Co. declined to say how much it spends on erectile dysfunction drugs, and a Chrysler spokesman could not provide figures.

Detroit automakers say hefty U.S. health costs are a competitive disadvantage with foreign automakers in the South that have nonunionized work forces. But cutting coverage, even for items such as Viagra, can be thorny after workers have become accustomed to them.

"Once you have these benefits, it's very difficult to take them away," said Jim Sanfilippo, president of AMC Inc., an industry consultancy in Detroit.

GM recently raised co-pays for erectile dysfunction drugs to up to $18 under a new agreement with the UAW, and it has pared benefits for salaried workers. The cuts are expected to lower the company's overall health care bill to $5 billion by year's end, Baldwin said.

But given the huge number of older GM workers who might need help to "keep the spark alive," the tab for Viagra and other erectile dysfunction drugs isn't likely to go down soon.

GM has more than two retirees for every active worker on its rolls.

When asked about the cost of Viagra and similar drugs, GM CEO Rick Wagoner recently told The Detroit News that the automaker needs take a look at the drugs it covers.

"It's clear that it would be good for the company to have a somewhat more restricted palette of prescription drugs that we pay for, but those are discussions negotiated with the union," he said. "There's certain things that people like to pick on, and it's easy to see why."

Many government and company health plans have already eliminated impotence drugs from their coverage plans.

GM appears likely to approach the UAW about eliminating this perk when the moment's right.

You can reach Brett Clanton at (313) 222-2612 or


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