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Health

Skyrocketing Pharmaceuticals Prices: What’s Driving Up the Costs?

Photo by Karolina Grabowska from pexel.com

Over the past decade, pharmaceutical prices have skyrocketed in different parts of the world. Due to inflation and the higher costs of living, many people are having difficulty paying for their medications. Some would even skip filling their prescription because they couldn’t afford it anymore.

Many are questioning what’s driving up these costs. The answer is multiple reasons. Not only does it cost a lot to develop these medicines, but the marketplace is also opaque. There aren’t enough government regulations, the patent system can be abusive, and many more. Continue reading to find out more about the reality of healthcare.

High Cost of Development

Did you know that it takes about 12 years to go through preclinical testing to the final approval? There are a lot of processes that go into creating a new drug and getting it approved. Indeed, drug development is a long and expensive process. It’s estimated that the cost to develop a new drug is about $3 billion. This is taking into account any failure in the process. Only 10-20% of drugs are tested and successfully reach the market.

On a deeper level, many experts believe that the cost of development is proportional to the incremental benefit thanks to the new drug. Developing a new drug entails using a larger sample size (which can be expensive) and many trials to secure regulatory approval.

If your government places a significant amount of public funding in the sciences to create new drugs, then the public has a legitimate right to ensure that these life-saving drugs are priced reasonably. Read up on the current affairs of your government since healthcare and politics usually go hand in hand with the pricing of medicines. You can observe this in the following sections.

Opaque Marketplace

Did you know that there are numerous parties involved in getting a prescription drug? Manufacturers, wholesalers, insurance companies, pharmaceutical benefit managers (PBMs), and more are involved. This long and complex supply chain gives a lot of opportunities for these individuals to increase different participants’ revenue and profits, which is often at the expense of the patients.

These financial details aren’t made public, and thus, it isn’t easy to figure out how each drug is priced. However, you can understand how much these companies add to the costs.

Consumers nowadays would try to find ways just to find a more affordable drug alternative. They would enter programs or use a BuzzRx coupon card to reduce medicine costs. These things, especially a coupon card, can help paying the bills bearable for patients.

Abusive Patent System

The patent system for medicines exists to protect the intellectual property of innovators. However, many have misused the patent system to extend monopolies, delay generic or bio-similar competition, and increase prices. Some brand-name companies would even attempt to add patent features that don’t truly represent true innovation.

As mentioned above, there would be some that would try to bury their generic or biosimilar competition just to let the brand-name counterpart get approved first. As you can see, starting from the patent system, there seems to be a lot of competition from the get-go.

Lack of Government Regulation

The lack of government regulation for countries would depend. After all, each country has its pros and cons. But let’s focus on the countries that do regulate how much their medicines can cost. Here are the following examples:

  • In Austria, the hospitals work out discounts for the high-costing drugs to keep the outpatient medical costs stable and healthy.
  • Those who are European Union (EU) member makes the pricing decisions whenever a new drug enters the market.
  • The Review Board of Medicine in Canada, or the Patented Medicine Prices Review Board (PMPRB), caps the drug costs based on how other countries price their medicine for a fair chance.

These are some of the countries that ensure that their citizens are getting the best chance at taking their prescribed or over-the-counter medicines. Other countries don’t have a similar set of rules as the United States. The pharmaceutical companies would set the prices for the drugs. As a result, it leads to high prices, especially for the unique and innovative drugs.

Marketing and Advertising

Like any business, companies would spend large amounts of money advertising and marketing their drugs, especially when the market is quite competitive. Drug companies have to advertise what makes their drugs different from others. Also, did you know that they would spend much more money to advertise these drugs than they would to research, test, and develop them? It’s not because they aren’t careful, but because the market is competitive.

All of this spending on the drug eventually drives up the costs of these drugs.

Final Thoughts

Medications are used to treat conditions and improve patients’ health. When these drug prices are too high, access to fair and proper healthcare becomes out of reach for many patients.

We all would want the price of prescription drugs to be within a family’s budget. However, this isn’t the reality, and many people have no choice but to risk their health due to the high costs of drugs. These skyrocketing prices have a heavy toll on society, especially those in the lower class.

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