Prescription Drug Prices in the U.S

The utilization of prescription drugs has increased across all age groups in the US, with 50% of Americans taking at least one prescription drug (Rice & Unruh, 2016). This can be attributed to physician-induced demand, substitution of pharmaceuticals for other medical regimens, commercialization of the products, increase in the aging population and drug insurance coverage, and also the increase in chronic conditions. Lathan discusses the startling fact that the rate increase of prescription drugs purchased was considerably higher in contrast to the US population growth - 71% and 9% respectively (Rice & Unruh, 2016, p. 264).

1. Pricing: Many Asian and African countries are poor and cannot afford the costly medicines. The Pharmaceutical firms spend vast amounts on R&D in creating and marketing drugs, thus charging high prices enables for cost of capital recovery and profit generation.

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.

Amongst those who become addicted to misusing their drugs and people readily taking advantage of this situation, there is an irrefutable and profitable market. Due to the growing accessibility and faulty restrictions on prescriptions, almost anyone can acquire opioids, and there is a large population of patients that sell their medication rather than use it. An article by Celine Gouder entitled “Who Is Responsible for the Pain-Pill Epidemic?” reports her experience with a cancer patient. According to Gouder, her patient "was selling his prescription narcotics to help support his wife and himself," and when hospitalized, overdosed when his medicine was actually administered to him. Though the legality of sharing, trading, and selling prescription medication is heavily restricted, the penalties for doing so are almost never applied, which fosters growth in these illegal activities. According to the CDC’s “Prescribing Data,” on opioid overdose:

Pharmaceuticals in the United States have been on the rise for years and everyone is trying to find was to get cheaper medication. New generics, 4 dollar lists, and coupons have been a growing force in pharmacies in the past few years. Some might think, “There has to be laws against rising prices, right?” Well, sort of.

Historically speaking, according to Narconon (2015), the issue of prescription drug abuse began in the 1800’s when consumers could self-prescribe medications such as cocaine and morphine. In the 1900’s, the Pure Food and Drug and Harrison Narcotic Tax acts were put into place as measures to control the sale and distribution of these substances (Narconon International, 2015). Today, the prescription drug problem continues to be a growing issue that has many consequences in our society.

The costs of prescription drugs in the United States: pharmacists’ voice must be heard is an article released by the American Journal of Health-System Pharmacy on April 16, 2016. The article addresses the rising cost prescription drugs in today’s society and how healthcare spending affects millions of citizens. The article stated that the reason why healthcare expenditure is rising is due to the aging population and the increasing prevalence of noncommunicable diseases. Without counting severe conditions, chronic conditions are highest in the older population ages 65 and above.

The prices in which the medication are set are necessary for research and development. Roy P. Vagelos, discusses about the problems regarding restricting pharmaceutical companies in the written source Are Prescription Drug Prices High?. For instance, it can reduce the profits to support research investments, since it costs at least $231 millions dollars in order to bring one new prescription medicine to the market and in a pharmaceutical company like Merck, there are at least 4500 researchers who work to develop products (Vagelos 1). In other words, it costs millions for researches to develop at least one new drug to present to the market and it also costs to pay researchers to help develop these new drugs. In addition, the article The Real Cost of “High Priced” Drugs,

Drug cost is very high even if the patient chooses to a generic version of the medication. Although there are similar drugs available to treat the same ailment one would think it would keep the cost low to minimize the competition that has no bearing on pricing medicine. According to Kesselheim, Avorn, & Sarpatwari, (2016), between 2013 and 2015, the cost of prescription drugs in the United States increased approximately 20% exceeding the forecasted amount of 11%. The cost of prescription drugs is undeniably one of the key components that adds to the cost of healthcare. Biologic drugs such as Humira can cost the insurance companies thousands of dollars and still leave the patient to contribute a high portion of the cost. Individuals who

Expenses of medication continue to increase. The expenses of both types of medications, brand-name or generic, still continues to escalate. Even though, pharmaceutical industries may consider the trend as a chance to rise revenue, payers are anticipated to start pushing back (Barnet, 2014). Medications is of the main reasons for the increase of medical care expenses. Rising expenses for medication placed a heavy financial burden on patients who have to have lifesaving medicines in addition to the overall United States health care system. Therefore, we are left having to fork the bill and pay for the expensive medications with higher premiums, out of pocket expenses, or pay both of them. In the United States, the expenditures on prescription

“Medicare formularies have looked to create tier structures that are more complex than the two-tier framework with generic medications on tier 1 and brand medications on tier 2, and shift a greater cost burden for the patients through increased cost sharing.” (Patel, Audet, 2014) Another possibility is the federal government creates and mandates a caped pricing for all drugs, mediations and treatments. Capping the price on drugs and copays ensures that the prices don’t continue to rise to the point of being unobtainable. Some however would argue that by doing this it would create a monopoly of pricing and take away all incentive for companies to be competitive in drugs costs. Some may ask why does the federal government care, well because its simple they have the responsibility to ensure good public order and ensure economic stability. The federal government also has the ability to cut cost through systems and policies such as Medicare and the Affordable Care Act by making copays for individuals cheaper and ensuring the local doctors, clinics and facilities prescribe the most effective affordable

While this case is literally full of negative aspects, we will only focus on the main points for both arguments. Pharmaceutical companies want to be sure that the products they spend years and millions of dollars to create are not easily reproduced and sold at discount prices. The profits pharmaceuticals make of their patented products are supposed to refinance new research. So taking away their exclusive distribution rights and allowing other manufacturers to just copy the product and sell it at

Nowadays it seems like legal drugs are more expensive than illegal ones. This dilemma occurs because the pharmaceutical industry affects the economy significantly. Although the United States is a mixed market economy, there are instances where the economy seems like a free market economy. A free market economy allows companies to determine the prices of goods free from government intervention. The pharmaceutical industry, despite several regulations set by the Food and Drug Administration (FDA), is a free market economy. Meaning, the pharmaceutical sector lacks government regulation and has control over the prices of specialty drugs desperately needed by the public. Therefore, the pharmaceutical industry being a free market negatively affects

The article intentionally opens with a contrast between the drug price trend of the brand-name drugs and the generic ones. The general picture is painted as gloom since the cost of health care and in particular spending on drugs went up in 2011 by a significant 13.3% and was expected to rise further in the year 2012 if the manufactured of such brand-name drugs did not get any cheaper. The ill intention of the drug manufacturers is depicted in the comparison between the percentage increases they have inflicted on the consumers against the 2% inflation rate for the same period. The article then pins the annual drug spending of the nation at $314 billion for the year 2011, a whole 4% increase over the previous year. Vinay therefore implies that the clients choosing within the basket of brand-name drugs are paying much more higher prices than before as compared to those who may be making choices between the brand-name basket and the generic basket.

To reduce the incidence of this problem, a two-tier solution is most likely to work given the fact that both consumers and producers have concerns that must be addressed. First, the government must regulate and reduce pharmaceutical prices in some manner to increase their affordability. And second, the government must reduce the costs for pharmaceutical companies to compensate for the loss of profit brought on lowering profit margins. By addressing both consumer and producer concerns with the simultaneous implementation of these two strategies, both parties, pharmaceutical companies in particular who have influential lobbyists at their disposal, would be more likely to support reform. For the first step, the US may find a solution in the