Rising Perscription Drug Prices

Imagine this: you are tragically diagnosed with a chronic life-threatening illness. Your only hope to survive is through medication to treat your disorder. The medicine is pricy but you can work out the costs each month. One day, you go to fill your prescriptions and realize the cost of a $13 pill has jumped to an astounding $750. You need this patented medication to survive and to afford it you end up losing your home, filing for bankruptcy, and sleeping in your car. This story sounds fictional but it is the reality for many Americans who can no longer afford their grossly overpriced medications.

Many other drugs also lose patent protection leading to the creation of substitutes that are cheaper.

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

Shortages of prescription drugs in the United States are a serious threat to our nation’s health and safety. At first blush, this problem appears fairly simple and straight forward to solve. In reality, there is a complex web of causation with a number of root causes contributing to drug shortages. The aim of this paper is to answer the question: How do we mitigate prescription drug shortages? This discussion is written from the standpoint of advising the current presidential administration how to address this crisis. This essay begins with a discussion regarding the background of the issue. Next, the landscape, including stakeholders in this matter is identified. Following, political, social, economic, and practical factors surrounding

The cost of prescription drugs in America has risen to the level that most Americans could not afford them with out the help of an insurance plan. The greedy and capitalistic pharmaceutical companies rely on the United States to fund the future development of drugs with skyrocketing prices and enormous margins. Recently the issue has extended into the mainstream political arena, thanks in part to the new Medicare bill(2). With the push by congress for the importation of drugs from foreign sources, regardless of the potential long and short term consequences, the time to vocally support health care reform is upon the American public.

1 Kaiser Family Foundation Report on the Uninsured. Available at http://www.kff.org/uninsured/7451.cfm. 2 Danzon, P., et al. “The Impact of Price Regulation on the Launch Delay of New Drugs.” Health Economics, 2005; 14(3): 269-292. Available at http://hc.wharton.upenn.edu/danzon/html/Journal_Articles.htm. 3 The Boston Consulting Group. “Ensuring Cost Effective Access to Innovative Pharmaceuticals – Do Market Interventions Work?” April, 1999. Available at http://www.bcg.com/impact_expertise/publications/files/Ensuring_Cost_Effective_Access_Innovative_Pharmaceuticals_Apr1999.pdf 4 Thorpe, K. et al. “Differences in Disease Prevalence as a Source of the U.S.–European Health Care Spending Gap.” Health Affairs (Web Exclusive) Oct. 2, 2007. Available at www.healthaffairs.org.

Lynas, K. (2010, November/December). Canadian pharmacists journal: Universal pharmacare could cut up to $10.7 billion from Canada’s annual drug bill. Notes, 143(6), 262. doi: 10.3821/1913-701X-143.6.262

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.

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.

Background: Americans pay the highest prices for prescription drugs in the world. Drug costs increased 12.6 percent last year, more than double the rise in overall medical costs. A new Kaiser Health poll shows that most Americans think prescription drug costs in this country are unreasonable, and that drug companies put profits before people.1 Take the example of albendazole which is broad spectrum anti-parasitic drug. In late 2010, the listed average wholesale price for albendazole was $5.92 per typical daily dose in the United States and less than $1 per typical daily dose overseas. By 2013, the listed typical daily dose price for USA market had increased to $119.58. Medicaid data show that spending on albendazole increased from less than $100,000 per year in 2008, when the average cost was $36.10 per prescription, to more than $7.5 million in 2013, when the average cost was $241.30 per prescription2. Albendazole is a very basic medicine but if we take the case of oncology medicines we are going to realize that oncology drugs have become synonymous with extremely high cost. The average cancer drug price for approximately 1 year of therapy was less than 10,000 per year in 2010 and had increased to $30,000 to $50,000 by 2005. In 2012, 12 of the 13 new drugs approved for cancer indications were priced above $100,000 per year of therapy. With typical out-of-pocket expenses of 20% to 30%, the financial burden would be $20,000 to 30,000 a year, nearly half of the average annual

Shame on you, America! Letting pharmaceutical companies monopolize the industry, price gouging our elderly, making people choose between purchasing needed medications and groceries. Why are people being forced to choose between their health and their homes? We are America, the land of the free, opportunity, and now the land of greed! What is the reason behind the high-priced medications and how do pharmaceutical companies justify their horrific cost. How, as Americans do we deal with the rising pharmaceutical cost? It’s time America, we stop trying to be bigger and better than everybody else and take care of the American people first!

These include strategies that are said to delay or discourage competition by generic companies. One of the strategies to delay generics is a practice known as "patent evergreening," in which a variation of a drug is developed such as a new form of release, a different dose, or a new combination to extend the life of the original patent. Another strategy is "pay for delay." These deal in which pharmaceutical manufacturers with patents that are nearing expiration pay companies to delay the introduction of a generic version. Consumers who rely on these drugs for their health are now forced to pay these higher prices for years before they see the generic.

Drug innovation is one of the key challenges facing the pharma industry. R&D focused pharma companies currently invest approximately $12.6 billion a year in new drug development. This figure historically has doubled every five years and it typically takes a company 10 years to recoup the amount invested on one patent protected approved drug, after which competition in the generic sector erodes profit margins by about 80%. Pharma companies will spend between $350 million and $1 billion on new drugs over a period of 15 years. This number is staggering considering that “95% of experimental medicines that make it to human trials fail to be safe or effective.” Once a drug makes it to market, pharma companies have a finite amount of time to capitalize on the sales, distribution and marketing due to patent expiration. Additionally, something else pharma companies, especially generic focused companies should worry about is due to lower rates of successful

Nicholas Capaldi (2003) addresses another issue within the pharmaceutical industry, stating that it is caught up in a “perfect storm.” He also mentions how there are a various of interest groups that have conspired to present this industry as profiteers who “……(a) spend obscene sums on marketing1 instead of research, (b) engage in differential pricing at home and abroad in an effort to gouge the American consumer, and (c) deprive developing countries of life-saving medicines” (2003). Because of the high costs of medications, as a result, this is forcing the pharmaceutical industry to make medications more affordable to consumers.

Moreover, generic drugs manufacturers sometimes start production of patent-protected drug analogues even before a patent expires. Although research-oriented companies in many cases are able to protect their patents, they do suffer from lost revenues.