High Cost Proposal

In 2013, pharmaceutical cost per capita in the US was $1,112 compared to Switzerland’s $730. Private insurance plans widely vary on medication coverage. However, there are programs that are no cost to the individual that can decrease the cost of medications for people without

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.

Generally consumers have very little bargaining power as medication is prescribed. Apart from US where there is pricing flexibility, governments in other markets enjoy substantial pricing leverage.

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.

Medicare, one of the greatest purchasing clients in the medication industry, is not lawfully allowed to bargain first hand with companies for lower medication costs or best possible price. (Kounang, 2015)

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 healthcare system in order to capitalize from the sick. In order shed some light on this issue, the magnitude, scope, and consequences of these prices must be examined.

The journalist Nadia Kounang further explains the differences between what the U.S pays on drugs and other similar developed countries, in the article Why pharmaceuticals are cheaper abroad. Kounang displays how much American need to pay for Gleevec (cancer medication) which is $6,214 (per month/per customer) whereas in Canada patients only have to pay $1,141 and in the U.K $2,697 (Kounang 1). These prices are the result of different organizations setting different price ranges with drug companies (U.S.A), and these enables American insurance companies to take advantage of it (Kounang 1). While in other countries there are not as many organizations, so this helps to set a deal of a price that benefit both the drug company and consumers (Kounang). Strictly speaking, by having these different medical insurance companies it has made it difficult for patients to afford their medication because there is no singular organization that can set drug price ranges with pharmaceuticals, while in other countries they don’t a variety of different medical insurances which enables the country to provide treatments that its citizens can afford. Thereby, if the government does not fully cooperates with other medical insurances, lowering the cost of medication will be difficult without affecting research and development. And as a result people who can not afford them will still struggle to obtain their required prescriptions.

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.

One of the underlying issues of rising costs lies in the hands-off role that the government is given in regards to the price-setting of drugs offered through prescription drug plans (PDPs). The Medicare Prescription Drug Improvement, and Modernization Act (MMA) of 2003 is the essential piece of legislation that created what Medicare Part D provisions (Frank & Newhouse, 2008) are in place currently. While this provision provides low-income older Americans with necessary medications, within the initial bill, the governmental program suffers a loss of autonomy. Under this bill, the government is barred from engaging in negotiations with pharmaceutical companies through the “noninterference” clause (Cubanski and Neuman, 2015). This prohibition

Pricing pressures from managed care and government programs and the migration to generic drugs due

A movement to "evidence- based" medicine may result in the consideration of over-all cost-effectiveness of drug product in policy and coverage decisions. Therefore, acquisition cost as sole criteria for drug choice may recede in importance in policy decisions by financiers of health care.