The Cost Of Pharmaceuticals Prescription Drug Prices And Retail Mark Up Essay

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.

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

Other factors include the use of distribution systems, drug shortages, pharmaceutical manufacturer mergers and acquisitions, patent expirations, cost and availability of raw materials, and profit driven businesses (Abramowitz & Cobaugh, 2016). The rising cost of prescription drugs and healthcare in general challenges the access and affordability of quality care to consumers not just in the United but also consumers around the world (GEN News, 2012). In addition to cost and access to care, the continuous rise in prescriptions drugs may have a negative effect on utilization of healthcare and satisfaction with healthcare system (Abramowitz & Cobaugh,

Pharmaceuticals play a more prominent role in health care Systems. The North American market today comprises 47 percent of the global prescription drug market, which now exceeds half a trillion dollars, with Americans spending approximately $251.8 billion annually on pharmaceuticals. This is up significantly from a decade earlier, when American consumption represented approximately one-third of the world market (2006) IMS Health). America's insatiable demand for prescription drugs has led to serious cracks in the drug supply chain of the world's leading pharmaceutical market (Wyld, 2008).

When it comes to the topic of prescription drugs being regulated, most of us will readily agree that this is a big concern for many Americans. Where this argument usually ends, however, is on the question of why do Americans pay some of the highest prices for prescription drugs compared to other countries. Whereas some are convinced that these high costs are set solely for the fact of the amount of money spent on producing these drugs, others maintain that there is an opportunity for medication prices to be regulated and also an opportunity to allow Medicare to negotiate with pharmaceuticals and possibly help bring down those high prices . I agree that prescription drugs should be regulated because there are many people that are victimized

Pharmaceutical Benefit Managers, PBM use several different pricing strategies and tools to charge employers for prescription drugs. These strategies help PBM’s turn a profit while still being able to create a fair and affordable situation to the employer. The goal for PBM’s is to remain competitive while generating a business contract between the organizations and pharmaceutical companies. The organization must be able to take an active role in their contracts to continue to provide quality and affordable prescription drug programs. “A comprehensive generics program can significantly lower prescription drug costs, control utilization and play a major role in helping to improve overall patient outcomes” (Jones, 2003).

Because pharmaceutical companies have so much power over pricing, they have started to raise prices with no motive other than more profit. In recent years, the industry has seen a steep price increase in drugs. These increases, in some cases, seem inexplicable. Regarding this is the recent example of the EpiPen, a common emergency drug used for patients with severe allergies. In the past, the EpiPen was available to patients for as low as 40 dollars. Now the price is “almost 600 dollars.” (Woodward, Layton) The problem with this is the device has had no fundamentally different changes to it. This means the pharmaceutical company responsible for the EpiPen raised the price for no reason other than more money in the company’s pocket. A

In 2012, the Food and Drug Administration (FDA) reported that in 2004, the “average price for generic prescription drug was $28.74, while the average price of a brand-name prescription drug was $96.01.” The FDA recognizes that the high price of medications puts the public at a high health risk. To help Americans be able to have access

The hepatitis C drug Sovaldi® is an egregious example. A bottle containing 84 pills costs $84,000. The cost to manufacture Solvaldi® is estimated to be around $130.19 and the company making Sovaldi® will earn back all the development costs in less than two years, while hepatitis C victims go bankrupt paying this extortionist price for another 14 years or so. Another example is Albuterol, a generic medicine prescribe for the treatment conditions such as asthma, bronchitis, or similar conditions was also cited by the Senate committee as having a 4,000 percent price increase. As one of the top 10 best-selling medicine, Albuterol had an exclusive 63.6 million prescription in the year 2013. It sold for $11 per bottle of 100, 2mg tablet and in April 2014, Albuterol sold for $434, an unexplainable price increase of $423 within six months (Falcon, 2016). “At the average market price for albuterol in October 2013, the drug would have cost Americans $699.6 million to acquire over the fiscal year 2013. Multiplying the new extortionist pice by the number of written script in 2013, the albuterol that once cost Americans $699.6 million per year now costs $27.6 billion. This represents a net change of 26.9 billion dollars more per year for the same generic drug that our health care system must now bear” (Falcon, 2016). The same applies to the Pravastatin, a generic prescription medicine for lowering cholesterol and

For the past few years, there has been consistent media coverage detailing the trends of escalating prescription drug cost. Furthermore, articles question the pharmaceutical industry’s motives for such a significant increase in the cost of medications. There are accusations that industry price increases are a result of tactics to increase profits. In particular, the media’s coverage focused on major drug companies where price increases were obviously egregious. For example, Valeant Pharmaceuticals, Turing Pharmaceutical and Mylan Pharmaceutical were called before Congress in the past year, to answer questions pertaining their significant price increases for life saving medications. These three companies are considered to be outliers in the

As time passed, prices of the drug increased while supply diminished. Because of the characteristics that promote stability, “relevant markets are characterized by highly inelastic demand, increasing the firms’ incentives to coordinate because even a small change in supply can have a large effect on price.” (Commission, 2011)

Unit price growth is a factor that is very important in the pharmacy it’s what drives spending on the products needed, but utilization growth helps because it performs roles in certain therapies. One of the main drug trends taking over at the time is specialty drugs but the cost is known to start at a high end cost of $30,000 with the highest being $100,000 for this line of treatment. Specialty drugs already take up more than a quarter of drug spending in the United States although the growth rate for traditional pharmaceuticals have slowed. But there’s been works on solution’s such as modernizing payment policies and also adopting new modes of clinical studies, also working on improvement of analytical

Last but not least, in order to correct the flaws and let the pharmaceutical industry keep blooming, I think it is crucial to restore medical ethics and corresponding policy. The "rebates" would be regarded as kickbacks in any other field of work. This idea has become a breach of medical morality and continued to plague the system. Although it would be very difficult to monitor every way in which doctors and pharmaceutical companies have financial relationship, some of the odious examples can definitely be picked out if we are really willing to. All in all, the goal is supposed to be for the doctors to choose the medically suitable drug, not the one he or she may have a financial interest in prescribing.

The pricing structure of prescription drugs is regulated through the Pharmaceuticals Benefit Scheme (PBS). The Pharmaceuticals Benefits Scheme (PBS) was introduced by the Commonwealth Government in 1950 with the aim to lower the cost of drugs to the Australian Public (IBIS World, 2015). This scheme governs 80% of prescription machine and as such has reshaped the pharmacy industry as 62% of revenue comes from these products (KordaMentha 2015). The government establishes an Approved Price to Pharmacists that they will reimburse to pharmacies, however the pharmacies themselves can negotiate lower purchasing costs from drug suppliers so that the profit margin is increased as displayed in Figure 3 (KordaMentha, 2015). Pharmainfocus reported that in instances chemists are earning 50% profit margins due to negotiations with manufacturers, whilst still

The Veteran’s Health Administration, VHA, uses a systematic government regulated pricing strategy for its pharmaceutical drugs service. The Pharmacy Benefits Management, PBM, service is in place to provide pharmaceutical services to beneficiaries of the VA. PBM’s of the VHA promote wellness, manage disease, ensure patient safety, and optimize health outcomes (VHA, 2015). PBM’s offer managed medication, emergency, and mail order services that help personalize healthcare. They also use research and technology to better serve the VHA and its beneficiaries.