NCPA - National Center for Policy Analysis

GM FINDS LIFESTYLE DRUGS ARE COSTLY

April 18, 2006

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 for 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, 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.

Source: Brett Clanton, "That little blue pill costs GM $17 million a year; But cutting health coverage for items such as Viagra can be difficult," Detroit News, April 16, 2006.

 

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