Drug Company Ethics And Consumer Hardships

Imagine this: you are tragically diagnosed with a chronic life-threatening illness. Your only hope to survive is through medication to treat your disorder. The medicine is pricy but you can work out the costs each month. One day, you go to fill your prescriptions and realize the cost of a $13 pill has jumped to an astounding $750. You need this patented medication to survive and to afford it you end up losing your home, filing for bankruptcy, and sleeping in your car. This story sounds fictional but it is the reality for many Americans who can no longer afford their grossly overpriced medications.

The current debate over the Mylan Company’s near monopoly of the epinephrine market through its EpiPen shows what can happen without monopoly regulation. While the cost to produce an Epipen is around $30, the price to the consumer is around $300 each. The economic implications for a family that needs to keep the device on hand to save a life can be excessively high, the emotional results of not having one when you need one are debilitating. This monopoly is further enhanced by state-enforced regulations requiring that schools keep EpiPens in stock and the, so-called, EpiPen law enacted in 2013, which leave little incentive for other pharmaceutical companies to develop their own technology for fast-acting emergency devices. (Bartolone, 2016) Breaking Mylan’s monopoly will not only lead to new product development but lower prices for consumers for a life-saving delivery

The cost of health care has been at the forefront of politics for years. It is one of the most talked about topics not just in political venues but also country wide. Every American has an opinion on how our economy can be fixed and they are passionate about health care reform. The price of insurance alone causes many Americans to not have coverage. For those that can afford coverage, the struggle to pay co pays is immensely crippling their bank accounts. Of these burdens on Americans today, the most frightening fact lies in the cost of prescription medications.

The cost of prescription drugs in America has risen to the level that most Americans could not afford them with out the help of an insurance plan. The greedy and capitalistic pharmaceutical companies rely on the United States to fund the future development of drugs with skyrocketing prices and enormous margins. Recently the issue has extended into the mainstream political arena, thanks in part to the new Medicare bill(2). With the push by congress for the importation of drugs from foreign sources, regardless of the potential long and short term consequences, the time to vocally support health care reform is upon the American public.

1 Kaiser Family Foundation Report on the Uninsured. Available at http://www.kff.org/uninsured/7451.cfm. 2 Danzon, P., et al. “The Impact of Price Regulation on the Launch Delay of New Drugs.” Health Economics, 2005; 14(3): 269-292. Available at http://hc.wharton.upenn.edu/danzon/html/Journal_Articles.htm. 3 The Boston Consulting Group. “Ensuring Cost Effective Access to Innovative Pharmaceuticals – Do Market Interventions Work?” April, 1999. Available at http://www.bcg.com/impact_expertise/publications/files/Ensuring_Cost_Effective_Access_Innovative_Pharmaceuticals_Apr1999.pdf 4 Thorpe, K. et al. “Differences in Disease Prevalence as a Source of the U.S.–European Health Care Spending Gap.” Health Affairs (Web Exclusive) Oct. 2, 2007. Available at www.healthaffairs.org.

In response to a loss of revenue from Medicare Part D prescription drug payments, drug manufacturers may increase the cost of pharmaceuticals elsewhere, such as the private sector. This escalation in prescription drug prices could result in the price of different insurance policies to increase as well, placing a greater burden on private insurance holders. Specific, quantifiable predictions regarding possible payment increases for privately insured individuals have not been as well-established as has the overall trend of a probable increase in these costs.

In 2010, the Affordable Care Act created a $250 rebate if the Medicare beneficiary was in the coverage gap. It also expanded coverage to the discounts given on brand name prescriptions. With reforms and improvement comes disadvantage to others. Beneficiaries and patients will be able to start saving more money, but it comes with a decline for the drug providers. According to Health Capital Consultants, “over ten years, closing the coverage gap may ultimately cost approximately $32 billion” and the pharmaceutical industry will be forced to take on most of this burden. These companies are paying for the flexibility they’re been given by MMA. They can “set their premiums, design their own formularies and are free to use cost management tools” and Medicare will reimburse plans for a “share of their drug costs.” (Guterman & Huynh ,

The pharmaceutical and biotech industry agreed to contribute billions of dollars to healthcare reform. Having agreed early in political negotiations to contribute any-where from an estimated $80 billion to $105 billion in fees, rebates, and discounts to help move the legislation forward (Nussbaum, 2010). By agreeing to support healthcare reform with their money and policies, they were able to avoid issues that had plaques their industries for years such as drug importation and the ability to negotiate drug prices for Medicare D. In return, the pharmaceuticals and biotech firms would agree to discount drugs purchased by Medicare beneficiaries, affected by the doughnut hole, of the Part D program by 50 percent (Spatz, 2010). Congress also proposed additional government subsidies to be added to the discounts that would further shrink the gap; beneficiaries will pay 25 percent copayment

We (Individuals) do not want an individual in jury duty under the use of illegal dugs. But, what if the individual is actually under prescription drugs?

Prescription drug prices are on the rise in the United States. Currently, the United States does not implement a price control on prescription drugs. Every day the supply and demand for prescription drugs fluctuates. Pharmaceutical companies produce drugs that are necessary for survival. Therefore, it is necessary for research and development to continue in the United States. Those suffering the effects of exorbitant prices must do so until a generic form of a prescription drug is produced. Once approved by the FDA, new drugs will make their appearance on the market and patients will no longer suffer financially. Until then, it is necessary for pharmaceutical companies to price their drugs based on the idea of supply and demand. This produces the profit used to fund research. Price controls discourage innovation. If a price control were set in place, of course the price of prescription drugs would decrease. However, the development of new drugs decreases with it. Today’s generation would benefit from lower prices, while future generations would suffer from the loss of drug innovation.

The implementation of the Affordable Care Act (ACA) will propel changes that were on the horizon for pharmaceutical and biotechnology firms. Pharmaceutical and biotechnology industries knew there was going to be some type of healthcare reform so they began to take the necessary precautions to prepare. The ACA had key provisions related to the pharmaceutical and biotechnology industry affecting Medicare and Medicaid. Legislation in the ACA will reduce cost for brand name prescriptions (Rx); this will reduce drug cost for patients, but increase rebates and discounts for pharmaceutical and biotechnology firms, therefore, imposing cost on the firms. The pharmaceutical and biotech industry was key in creating legislation for the ACA, according to CMS (2009), “despite

Acquiring or being born with a life-threatening disease is a very expensive experience in the United States. Notably, prices of some of the most popular drugs, like Mylan EpiPens have increased drastically over the last couple years. This can make it extremely difficult for poorer individuals to buy expensive medication, especially if they are not on an already overpriced health insurance plan. The article “Don’t Only Blame Mylan for $600 EpiPens” written by Ezekiel J. Emanuel on September 8, 2016 and published by Fortune Insiders analyzes the recurring high drug prices gouging sick individuals in the United States. Poor competition, patents granted by the United States Patent and Trademark Office and lengthy drug approval processes are leading

This process of delay by drug companies is called, “evergreening” and once again proves the point that money overrides a person’s quality of life or life in itself. Proven in 2013, pharmaceutical companies actually got the US Supreme Court to allow them to pay these generic drug companies in order to delay the release of certain generic medications for some time, after the patent for medication expires. This allows pharmaceutical companies more time to profit off of their name brand medications (Belk). In fact, pharmaceutical companies paid the FDA around $712 million dollars in 2013 for prescription drugs user fees which in return helped the FDA in the process of approving drugs for sale and distribution in the US

This shows that insurance companies can influence the prices placed by pharmaceutical companies. If all insurance companies unified to stop purchasing overly priced medications and shopped around to cover medications from companies with the lowest price, they could create a drive to pressure pharmaceutical companies to have competing lower prices. They could also demand transparency in the cost of medications, helping bring awareness to the American consumer.

As students of BBA, our course instructor of Ethics in Corporate Society, Ms. Tania Danish authorized us to make a report on the “PHARMACEUTICAL MARKETING-the growing ethical concern?” We were required to make a report in accordance to our learning in the course of Ethics in Corporate Society and simultaneously increase our knowledge in regard with the ethics of Pharmaceutical Marketing in Pakistan.