Even if you haven’t felt it in your wallet yet, you’ve certainly noticed it dominating the news: Prescription drug costs are going in one direction only: up.
This is a chronic issue facing our healthcare system. And it appears to be getting worse. If you’ve wondered what’s behind skyrocketing drug prices, you’re not alone. There are even ongoing studies into this issue. Unfortunately, despite this research, experts can’t seem to agree on where to lay the blame. But one recent study — conducted by researchers from Harvard Medical School, no less — echoes my personal theory.
The Harvard researchers found that between 2010 and 2012, the rise in drug costs was hampered by the fact that patents expired on many widely used medications. However, costs are climbing again, thanks to a number of new and very expensive products hitting the market, combined with a steep price hike for older drugs.
I sort of, kind of, get the expense associated with new drugs. After all, the drug companies do need to recoup their development costs. (Still, I think the American public is being ripped off in egregious ways.) But for older drugs, there really is no excuse for rising prices.
The researchers also noted that between 2013 and 2015, net spending on prescription drugs rose about 20 percent. That has led to prescription drugs accounting for approximately 17 percent of total healthcare spending in the United States.
That’s ridiculous and outrageous. And it’s the fault of the drug industry, if you ask me.
But you don’t have to take my word for it. The Harvard group agrees, but casts some blame on the U.S. government too.
The high prices, they write, largely arise “from the approach the United States has taken to the granting of government-protected monopolies to drug manufacturers, combined with restriction of price negotiation at a level not observed in other industrialized nations.”
Add to that the fact that the U.S. healthcare system allows drug makers to set their own prices — which is not the case in other advanced nations — and you have a recipe for rich pharmaceutical execs and a cash-strapped populace.
Basically, pharmaceutical manufacturers are able to maintain high prices because they’re protected from competition and immune to any meaningful negotiation. Not to mention the fact that they are one of the only industries that self-regulate and do not have to, by law, report adverse affects or situations that arise from their products.
According to this study, new, branded products that are protected by patents account for the lion’s share of rising costs. These hot-off-the-presses drugs make up only 10 percent of prescriptions in the United States, and yet they eat up 72 percent of drug spending.
Of course, drug makers have always found a windfall in new drugs, but they’re not content to just make a profit — they want to make a killing. In fact, between 2008 and 2015, the most common branded drugs increased in price 164 percent — that’s more than 13 times the consumer price index (12 percent).
And on top of that, one segment of prescription drugs — known as “specialty drugs” — now exceeds $250,000 per patient per year.
Who can afford that?
Once a patent expires, there’s hope for relief, since other companies can now make generic forms of the drug and the competition drives down the cost. But even with that there’s a catch: Between 2008 and 2015, generic drug prices remained stable. Since then, though, the price tags on 400 drugs have risen by more than 1,000 percent.
Some of the leaps of late have been almost too astronomical to believe. Isoproterenol (a heart drug) jumped 2,500 percent, nitroprusside (a blood pressure drug) by 1,700 percent, digoxin (another blood pressure drug) by 637 percent, and the EpiPen by 400 percent.
Big Pharma can also skirt competition from generics by finding ways to extend their patent under a different use. Or they can pay companies to delay the entry of generics into the marketplace. This particularly evil tactic is called “pay for delay.” It’s so controversial that the U.S. Federal Trade Commission has pursued a number of lawsuits based on it — including some that have made it to the Supreme Court.
It would be helpful if Medicare, which pays for almost a third of the nation’s prescription drugs, could use its purchasing power to help drive down prices. But unfortunately, this is another instance where the government holds industry’s interests above those of the American public. Medicare is actually legally prohibited from negotiating for lower prices.
If you needed more reason to take control of your own health, this should do it. I’m truly sorry for people who don’t look for natural alternatives, and remain at the mercy of a corrupt and greedy drug industry, and left high and dry by their government.