Drug Pricing: The Healthcare Industry In The United States

The prices of prescription drugs in the United States are by far the highest in the world. [1] On average, Europeans pay 40% less than Americans for the same medications. [2] Consumers have been resorting to several ways, sometimes putting themselves in harm’s way, to alleviate the burden of high prescription drug costs. Some buy their medications online or cross the borders to neighboring countries so they would be able to afford buying their needed medications. Others have resorted to the illegal act of selling their unused medications in online forums just to recover part of their expenses. Many factors contribute to the increased drug prices in the United States including research and

Improvements in health care and life sciences are an important source of gains in health and longevity globally. The development of innovative pharmaceutical products plays a critical role in ensuring these continued gains. To encourage the continued development of new drugs, economic incentives are essential. These incentives are principally provided through direct and indirect government funding, intellectual property laws, and other policies that favor innovation. Without such incentives, private corporations, which bring to market the vast majority of new drugs, would be less able to assume the risks and costs necessary to continue their research and development (R&D). In the United States, government action has focused on creating the environment that would best encourage further innovation and yield a constant flow of new and innovative medicines to the market. The goal has been to ensure that consumers would benefit both from technological breakthroughs and the competition that further innovation generates. The United States also relies on a strong generic pharmaceutical industry to create added competitive pressure to lower drug prices. Recent action by the Administration and Congress has accelerated the flow of generic medicines to the market for precisely that reason. By contrast, in the Organization for Economic Cooperation and

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.

Anyone who has purchased prescription medications has probably wondered why they cost so much, and rightfully so. Medication prices in the United States have been on a steady increase for decades, however, prices have been drastically increasing as of recent. Pharmaceutical companies have tried to justify these price increases due to the demand, the high cost of research, and the high costs of development and approval. Notwithstanding, the extent to which the prices have increased is not justifiable. Americans should be against these high medication prices and take action because pharmaceutical companies are taking advantage of our health care system in order to capitalize from the sick. In order shed some light on this issue, we must examine the magnitude, scope, and consequences of these rises in price.

U. S. citizens pay the highest prescription drug prices in the world. This is an injustice that must be corrected. The "U.S. forbids the import of prescription drugs by anyone other than the original U.S. manufacturer, and even then only when the drugs meet all the approval requirements of the U.S. Food and Drug Administration (FDA)" (Barlett & Steele, 2004). Prescription drug prices are outrageously high in the United States because of the influence of advertising on consumer purchasing, the misleading statements by pharmaceutical companies about the cost of research and development of new drugs, the manipulation of patent laws, the antiquated laws regarding importation of

Other opponents charge that the high prices of drugs aren’t examples of price gouging at all, but necessary increases for drug makers to recoup costs of research and development. Yet a Health Affairs study shows otherwise: enough money is made by US drug companies that they could cover research and development and still save “US patients, businesses, and taxpayers approximately $40 billion” per year, if they operated like the rest of the world.

The manufacturers of Sovaldi drug are also of the opinion that government and public officials do not take into account all the benefits mostly economically which emanate from the prescription of the drug. They argue that the high price is very effective in limiting or completely getting done with other hospital expenses that would be incurred in the long run because the drug is effective in the curing of the disease rather than the management of symptoms over the years and, therefore, savings (Charles, 2015). . Most states that try to limit the use of Sovaldi have received lots of lawsuits that analysts say not the definite solution of the underlying problem with Sovaldi being just the first of many highly effective but expensive drugs that are expected in the market due to the ever increasing cases of chronic diseases.

Why are prescription medications so expensive in the United States? This is a fair question considering citizens of other countries pay much less for their medications than those in the US. For example, Jevtana, a medication used to treat prostate cancer costs $8,659 for 30 mg through Medicare. However, across the border in Ontario, the same dose costs $4,618 [5]. In another well publicized case, the price of Daraprim, an antifungal medication, was raised from $13.50 a pill to $750 a pill after being acquired by Turing Pharmaceuticals. That is a 5,000% price hike. It doesn’t take a genius to figure out that pharmaceuticals are a big business in the US. Yet the question remains. Why are they so expensive?

When FDA approved a new drug, the drug makers put its price. But how anyone can tell that the price of the new drug is worth its value and effectiveness. Patients, employers, providers, policy makers, and even insurance companies should trustworthy independent source to help assess the value and effectiveness of the new drug, and here the role of Institute of Clinical and Economic Review (ICER) begins.

The EpiPen is only one out of numerous lifesaving medications that pharmaceutical companies have increased the price to an amount that the average consumer cannot afford. As both a concerned constituent and a health care provider, I would never want people to have a lack of access to medications that could potentially save or improve their quality of life for any reason. It is now imperative that the government on all levels demand transparency in the cost to create and manufacture medications and also enforce drug price controls. Senator McEachin, this is why I want you to co-sponsor and support Senator Emmett Hanger’s prescription drug price transparency bill (SB487). This bill will require drug manufacturers to give information on the cost of research and development, manufacturing, marketing, price changes, and profits for each prescription drug sold in the Commonwealth of Virginia for a wholesale cost of $10,000 for a single treatment course (SB487: Prescription drug price, n.d.; Silverman, 2016).

It is no secret that the cost of American healthcare is on the rise. Already the nation is spending about $1.65 trillion a year on healthcare. That represents 15 percent of gross domestic product, the total output of goods and services. It consumes one-fourth of the federal budget, more than defense. (Allan Rubin) This is due to the factors of expensive technology, less stringent HMO cost management, and more specifically to this paper, rapidly rising drug costs. Surveying nearly 3,000 employers, Mercer Human Resource Consulting finds that their health-benefit costs rose 10.1 percent this year, while inflation hovered around 2 percent.

High prices are hurting American families. Americans pay exorbitant prices for all kinds of care. High prices are why medical debt remains a leading cause of bankruptcy in the United States, and nowhere else. The US healthcare delivery system differs from those of other developed countries in three notable ways: It relies on multiple sources of private financing, it covers less of the population, and it costs much more. Shaped by the institutions, ideas, and interests that drive American policymaking, the US health care delivery system is uniquely complex, costly, and unequal. Initially private, it has become an increasingly complex public/private mix, as incremental reforms adopted over many decades have sought to correct market failures

In recent years the cost of pharmaceuticals has risen exponentially. It is no secret that America spends the most money on healthcare services yet has the worse outcomes. In a paper written by Friedman in 2016, they estimated in 2012, the United States would spend $883 per person on pharmaceutical drugs. This is almost twice the amount that is spent in other developed countries. The report also showed figures and compared how much other developed nations such as

In 2014, the top ten pharmaceutical companies in the world had a total revenue of $429.4 billion dollars. One common misconception is most profits the pharmaceutical companies collect, goes back into research and development (R&D) of new medications. Yet, in that same time period only $65.8 billion dollars of the total $429.4 billion went toward R&D. Their combined profits for 2014 were $99.8 billion dollars with an average profit margin of 19.6%, Pfizer is the highest being at an amazing 43% (BBC News, 2014). Seeing all of these facts and figures collectively, shows it is clear the US is spending too much on healthcare. An important question is, why and what can we do to decrease our spending?

Big Pharma,which has been a main contributor in innovation, has increasingly de-committed itself from the high-side of R&D and is letting smaller biotech companies and the National Institute of Health do most of the heavy lifting. The National Institute of Health is actually a government funded program that has invested close to $900 billion in research since the 1930s. With that being said, the consumer is essentially paying twice for pharmaceutical research. However, just because they are spending less doesn’t mean that they