IntroductionThe supply. They negotiate the prices to make
May 15, 2019
IntroductionThe increasing cost of prescriptions drugs in the United States has increased concern for patients, prescribers, insurance companies and policymakers. In 2015, people were outraged when Turing pharmaceuticals increased the price of Daraprim, a 62-year old drug used to fight a life threatening parasitic infection, from $13.50 to $750 per pill (Pollack). Similarly, people were angry when the price of insulin tripled between 2002 and 2013 and the price of EpiPen-a 4 decade old lifesaving allergy medication-had a price hike of 500 percent since 2007 (AARP bulletin). Pharmaceuticals claim that the high prescription prices are a result of the money spent on research and development (R&D) and used to stimulate innovation. However, there is more at play than what one is led to believe. These prescription prices are skyrocketing for consumers in America because of complex healthcare system, limited competition, and increased spending on marketing – not because of increased spending on R&D. As a result of these rising prescription prices, Americans are paying more out-of-pocket for prescriptions and are experiencing increasing financial constraints. Healthcare SystemsWhen compared to European markets, the US is paying several times more for the same drug than countries like Britain. In fact, “U.S. prices for the world’s 20 top-selling medicines are, on average, three times higher than in Britain” (Hirschler). One of the main reasons for this is that unlike the rest of the industrialized world, the United States’ capitalistic approach allows pharmaceutical companies to set their own price for a given drug. The insurance companies and hospitals then buy the drugs for their individual consumers and negotiate their own prices with pharmaceuticals-causing an unregulated variety of pricing for prescriptions. However, in the UK, their National Health Service (NHS) program, funded by taxpayer money, purchases drugs for the entire country’s supply. They negotiate the prices to make it affordable to all UK citizens. They determine if the price demanded by the manufacturer is excessive based on the benefits it provides. And since there is only one buyer, pharmaceutical sellers are more sensitive to how much their customers are willing to pay in countries like the UK since the negotiation can determine whether the drug will be sold in the market or not (Kounang). National health insurance systems, like the United Kingdom’s NHS, allow for streamlined negotiations and lowered pricing.