No doubt, you have read stories about high drug prices. High drug prices are the result of 2 government policies:
- The US grant monopoly protection to drug manufacturers: With monopoly protection (no competition) pharmaceutical companies are free to charge whatever price they wish. One example; Sofosbuvir a Hep C drug that boost a cure rate of 90% cost patients $84k in the US. Compared to drug treatment in India where competition exist, patients pay $336 for the same cure rate.
- Imposing coverage requirements on government-funded drug benefits:
The requirement state that most government drug payment plans cover nearly all products, which eliminates the patients or anyone else’s ability to negotiate prices.
5 realistic short-term strategies could address high drug prices:
- Enforcing more stringent requirements for exclusivity rights privilege
- Enhancing competition with generic drug
- Providing greater price negotiation by governmental payers
- Better cost comparisons and effectiveness of therapeutic alternatives
- Educating patients, prescribers, payers, and policy makers about these choices.
The US spends more on prescription drugs than every other country. In 2013, Americans were spending $858 per person compared to $400 for other industrial countries. Drug manufacturers are awarded exclusive market rights by the Food and Drug Administration (FDA). To be fair, it is very costly for drug manufacturers to bring their products to market. For many the cost to market can exceed $1 billion. These costs include research and efficacy testing to ensure consumer safety regulated by the FDA. This has led many populous politicians to propose reducing regulations. Cutting regulations always sound like a great idea, until people start dropping dead because lower regulations mean lower standards.
After the patent expires (exclusive agreement), generic drugs enter the market reducing drug costs. The negotiated price is the primary driver behind high drug prices. The 2nd contributor to high drug prices is physicians preference of prescribing name brand versus a generic alternative when available. Lastly, drug manufacturers site the high cost of drug development as the reason for high drug prices. independent research has not shown a correlation between cost of development and drug pricing. Pharmaceutical companies primarily set price based on market conditions.
For more info read “Paying for Drug Performance“