Pharmaceutical Industry Pricing Models Essay

U.S. based companies hold rights to most of the world’s rights on new medicines and holds thousands of new products currently being developed. As of 2012, the industry helps support almost 3.4 million jobs in the U.S. economy. It is also one of the most heavily R&D based industries in the world. In the United States, the environment for pharmaceuticals is much friendlier than other countries around the world in terms of pricing ability and regulations. Both the Pharmaceutical and Biotechnology industries have experienced significant growth in the past year with year-over-year increases of 13.02% and 34.69% respectively. It is an even more striking when looking at the past five years considering both have beat out the S&P 500 with pharmaceuticals increasing an additional 31.44% and the biotechnology sector besting an astonishing 269.3% more return than the

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

In a highly competitive and dynamically changing market it has become imperative for the leading pharmaceutical

The rise in costs of prescription medicines affects all sectors of the health care industry, including private insurers, public programs, and patients. Spending on prescription drugs continues to be an important health care concern, particularly in light of rising pharmaceutical costs, the aging population, and increased use of costly specialty drugs. In recent history, increases in prescription drug costs have outpaced other categories of health care spending, rising rapidly throughout the latter half of the 1990s and early 2000s. (Kaiseredu.org, 2012).

American citizens envision a society which all people have access to high quality and affordably priced prescription medications. For many consumers, access to prescription medications is out of their reach. There is no denying prescription medications importance; they are known for being associated with saving people’s lives, maintaining people’s health, and improving the lifestyles for consumers.

The high prices set by pharmaceutical companies for drugs allows the companies to continue researching, developing, and producing new drugs. As new diseases are discovered, new medications must be discovered in order to treat them.

Although R&D has been retained by the large pharmaceutical firms, there has been a continuous decline in the R&D productivity. Controlling R&D is imperative to the success of a Pharmaceutical firm. However, as the pharmaceutical industry is maturing, there are diminishing returns to the R&D investment. Fewer and fewer blockbuster drugs are being discovered and therefore R&D is not the most value adding component in the value

The pharmaceutical industry includes companies that research, develop, market or distribute generic and branded drugs. The industry expanded during the 1980’s and drugs to treat heart disease and AIDS were prominent. Consumer demand for nutritional supplements and alternative medicine increased during the 1990’s with the Internet facilitating direct purchases of drugs. Advertising for direct consumption of pharmaceutical drugs became more prominent; pharmaceutical companies were criticized for over medicating personality or social problems.

Effective medication helps with the rising cost of health care. When medication is working, the patient’s visits to the hospital and doctor’s office will decrease. The cost of new medication is exceeding the buyer’s ability to pay for it, and pharmaceutical companies begin to lose money when the drug loses its patent. However, generic drugs become available for the medication, and patients can afford to purchase it to treat their disease or condition. National discussions with providers, payers, and health policy makers have seriously considered various solutions for mitigating drug cost, with the ultimate goal of allowing patients to access appropriate and necessary treatments (Li & Shane, 2017). The government no longer has to decide who gets the medication, and certain therapies because of cost. Insurance companies will now cover the drug in its generic form. On the other hand, the pharmaceutical companies can no longer profit from and generic drug, and are forced to make new and improved drugs for profit. The patient will benefit by getting the medication that is needed to have a better quality of

Recently, there has been a debate about the high prescription drug prices in the United States. Accounting for 9.7% of the national health expenditure, $329.2 billion was spent on prescription medications ($931 per person) in 2011 (Linton, 2014). So what exactly is the average American getting with their $931? Well, because there is an extraordinary amount of time, effort, and energy that goes into creating, manufacturing, and distributing a new drug, it’s no wonder the prices are so high. But what other costs are folded into the prices of your prescribed medications? This review looks beyond just the research and development costs needed to take a new drug from idea to shelf by examining several journals and other credible, secondary sources, to shed some light on how much pharmaceutical companies are spending to develop, advertise, and sell their drugs.

This report provides an analytical strategic review of the global pharmaceutical industry; its origin, evolution,

Drug portfolio management is one of the most important determinants of long-term prosperity of research-oriented pharmaceutical companies.

Further more, with other benefits such as low costs in research and development, strong clinical research capabilities, and low sovereign risk, Australia is advancing as one of the most prominent players in the pharmaceutical industry (Productivity Commission 2003). Australia’s population represents 0.3% of the world’s population and consumes around 1% of the total global pharmaceutical sales. The industry generated a total revenue of $6.1 billion in the year 2002 (ALRC 2014).

Industry Classification: This external industry analysis is explicitly examining the significant factors relevant to the Brand Name Pharmaceuticals Manufacturing Industry in the United States (NAIC Designation: 32541a). This industry is characterized by pharmaceutical manufacturers who focus on the development of brand-name prescription and over the counter drugs that are used to prevent illnesses in humans or animals. Pharmaceutical manufacturers within this industry primarily engage in activities centered around research and development and active ingredient, chemical pharmaceutical, and biological pharmaceutical manufacturing. The research, development, and manufacturing

Hypothesis: The manipulation of patents and market pricing have allowed pharmaceutical companies to raise the prices on drugs necessary for individuals in the US compared. With no competition, the companies are able to exploit the patent system to maximizing profits with no regard to the consumers economic welfare. The price of pharmaceuticals are constantly higher than the rest of the world and the people of America are paying that price.