Every day, Americans are facing the realities of rising prescription drug prices. In some cases, only the wealthy can afford to pay for medication. Despite this problem lasting several years, solutions have been rare.
According to the National Center for Health Statistics, about 8% of American adults tried to save money by failing to take medicine as prescribed. Another 15.1% asked their prescribing doctor for cheaper medication. Others opted for alternative therapies.
It is sad when prices force people to make risky changes to their treatment.
Why have prescription medications become expensive and how can we recover from that? Read on to learn more.
Factors Affecting Drug Prices
Joshua Sharfstein, MD, associate dean for practice and training at Johns Hopkins University’s Bloomberg School of Public Health in Baltimore, says that drug prices are rising between 10 percent and 12 percent each year. Such a trend is detrimental to the public.
There are several factors affecting drug prices:
High cost of research and development
Pharmaceutical companies spend millions of dollars researching new drug formulas for different diseases. It can take up to 10 years before a new drug enters the market.
Companies pay for costly research and several drug trials.
The drug needs approval from the Food and Drug Administration (FDA). As a business, the company will recover the cost of research by setting a high drug price.
Lack of Pricing Regulations
Drug makers have a free reign in setting the prices of their products.
The US government is wary of interfering with market forces to set a cap on prices. Monopoly rights given by the FDA don’t help either. There is a fear that fixing prices will hamper innovation.
Patents give pharma companies the exclusive power to set their own prices. They won’t face any competition for many years. In May, a Blue Shield Blue Cross Association report said consumers are paying 18% more money out-of-pocket for patented drugs.
In some situations, raising prices does not affect the demand for a particular drug. As such, drug makers find a balance between increasing drug prices and losing consumers.
Once the patents expire, there is an increase in the supply of generic drugs. This helps to lower the prices.
Prescription Drugs getting New Owners
Some drug companies are acquiring the patents of drugs that have been on the market for years. They then raise the prices to get a return on their investments.
Companies introduce drugs that serve the same function as those of their rivals. They get an advantage over the competition by setting affordable and competitive prices.
Drug prices rise every year because pharmaceutical companies want to make a profit. That is the goal of most businesses. Thus, they will keep selling at higher prices as long as there is a market for their products.
Recovering from High Drug Prices
As you can see, there are many things affecting the pricing of prescription drugs. How, then, can we fix this to ensure patients get what they need? Here are some ideas:
Prevent Pharmaceutical Company Mergers
Large pharmaceutical companies are always on the lookout for potential mergers. 2015 had the highest number of mergers and acquisitions in the industry. That did not bode well for consumers.
For example, Valeant acquired rival companies and raised their drug prices. A scandal occurred with accusations of fraud and setting unreasonable drug prices. Consumers were not happy with the company’s profit-driven strategy.
Allowing mergers or acquisitions creates monopolies in the industry.
That means the companies can set higher prices on a whim. Acquiring smaller companies with specialty drugs creates the possibility of raising prices.
There has to be more competition in the industry to force the companies to reduce their prices. High demand for a particular drug without enough supply is bad for the market. It makes it difficult for the consumer to buy at an affordable price.
Allow Importation of Prescription Drugs
Brand-name drugs are more expensive in the U.S than in other countries.
Since it is currently illegal to import drugs, Congress should fix that law. The FDA can then regulate the importation of quality drugs from other countries.
Extra generic drugs will boost supply and provide affordable options to consumers.
Make Use of Pharmaceutical Comparison Shopping
Patients should try to find alternatives to the expensive brand-name drugs. Pharmaceutical companies make billions of dollars selling their prescription drugs.
A report by the IMS Institute for Healthcare Informatics shows the antacid drug, Nexium, sold over 6 billion dollars. A comparison-shopping search feature can help you find the best price for Nexium. This will save you a lot of money.
Change the Restrictive FDA Policies
The FDA is an important part of safety regulation for the American people. Yet, some of its policies work against their best interests. For example, by giving pharmaceutical companies lengthy patent protections.
Lengthy patents give the drug makers exclusive rights over an important drug.
That means they can set any price they wish without any repercussions. That’s how drug prices have been going up without any consumer protection.
Second, the delays in approving new drugs ensure they are safe for public consumption.
Unfortunately, this means when they get approval, they are in some way behind the times. Drug makers factor in this duration of time into their pricing.
Still, on the approval of drugs, many generic drugs that can make a difference in the market prices. Sadly, they don’t receive approval for a long period. If the federal government can fix this system, it can help reduce the drug prices quicker than usual.
Fix the Insurance System, Medicare, and Medicaid
The government can limit the extra costs insurance providers pass to consumers. These out-of-pocket costs can be very high at times. Providers also raise the consumers’ premiums and deductibles to cover themselves. This is wrong.
Congress and the federal government can work together to fix Medicare and Medicaid. For example, specialty drugs are very expensive and Medicare has to cover those costs. Unfortunately, drug lobby groups hamper any discussions on reducing drug prices.
Lawmakers should pass transparency laws for pharmaceutical companies to reveal their pricing strategy. The companies will show their marketing, research, and drug development costs. This will force them to justify any price increases.
Get More Information about Prescription Drugs
The rising drug prices will prevent patients from getting treatment. We need to come up with more solutions.
Contact us to learn more about prescription drug prices.