Prescription drug prices in the United States

[1][2] The high cost of prescription drugs became a major topic of discussion in the 21st century, leading up to the American health care reform debate of 2009, and received renewed attention in 2015.

[10] In 2007, the AARP published a series of studies showing that prescription drug prices have been rising significantly faster than general inflation.

President Biden supports a repeal of the negotiation ban, but did not include it in his American Families Plan, leading other Democrats to push for it to be added.

Once the yearly out-of-pocket expenses reached $4,850, catastrophic coverage phase begins and the person only pays a very small amount for continued medication.

[21] In response, the Department of Health and Human Services and both houses of Congress held a public meeting and hearings respectively to investigate price gouging.

[41] One example is from a study done in 2018 from the American Diabetes Association that stated that the cost of insulin devices at a pharmacy can be almost $200 less than at the listed prices by analogs.

[42] A November 2020 study by the West Health Policy Center stated that more than 1.1 million senior citizens in the U.S. Medicare program are expected to die prematurely over the next decade because they will be unable to afford their prescription medications, requiring an additional $17.7 billion to be spent annually on avoidable medical costs due to health complications.

Another common way that people saved money, was to skip or reduce dosages or fail to fill a prescription entirely due to cost restrictions.

The factors that contributed to whether or not a person was more likely to not follow their prescribed medication instructions were age, the number of checkups with a physician, ongoing health problems, income, and insurance coverage.

The reason for those with ongoing illness or disabilities to skip doses is likely due to the increased complexity and the higher prices of the drugs needed.

An additional 2 million packages of pharmaceuticals arrive annually by international mail from Thailand, India, South Africa and other points".

[57] But even as the patent term nears expiration, pharmaceutical manufacturers employ several strategies to delay the entry of generic drugs to market.

[60] This system creates a natural monopoly for the drug companies meaning that they can drive the price up without facing any punishment from the federal government.

[64] As of 2015, several pharmaceutical companies had developed a new business strategy "of dominating noncompetitive markets for older drugs and then increasing the price substantially".

[69] The key findings of this study relate to the median net income margin which is the percentage of revenue after all the companies expenses have been deducted.

[76] Congress passed the Orphan Drug Act (ODA) in 1983 to incentivize pharmaceutical companies to research rare disease states like acquired hemophilia A and glioblastomas.

For example, Glybera was a $1 million injection used to treat a rare metabolic deficiency, but was removed from the market due to lack of demand.

[84] Usually, when enough generic drug products are introduced to the market, the cost to buy prescription medications decreases for both the insurer and the patient.

[85][86] Generic drugs have been shown to reduce healthcare costs in multiple ways, among them increasing competition which, in most cases, helps drive prices down.

On the other hand, the European Medicines Agency (EMA), Europe's equivalent to the FDA, had only 24 generics drug applications awaiting approval.

In addition, some countries, such as the United Kingdom and Germany, encourage comparative effectiveness reviews, whereby cost–benefit analyses of rival drugs determine which perform best.

[98][page needed] Charles L. Hooper and David R. Henderson wrote in a 2016 publication of the Cato Institute that drug company's pricing correlates with the per capita income of foreign countries and they opined, that in some cases foreign governments drive such hard bargains to the point that they do not contribute to the cost of R&D, leaving "Americans to subsidize the R&D costs".

[99] Jeanne Whalen wrote in the Wall Street Journal in 2015, "The upshot is Americans fund much of the global drug industry's earnings, and its efforts to find new medicines."

To ensure compliance, the FDA Generic Drugs Program conducts stringent reviews (3,500 inspections of manufacturing plants per year).

[127][128] On October 9, 2017, Governor Jerry Brown of California passed Senate Bill 17 (SB-17) Health care: prescription drug costs.

Excessive is interpreted based on the following criteria:[130] Low levels of drug spending in Canada are not solely attributable to the regulatory activities of the government, but also the actions of provincial and private insurance plans.

She predicted that the tradeoff if prices were set too low, would be fewer new treatments coming to market in about a decade (due to the long development lifecycle).

[132] David Mitchell of the advocacy group Patients for Affordable Drugs argues that in the face of reduced pharmaceutical company profits, government-funded research could provide an ongoing pipeline of new treatments.

[137] Individual importation of lower cost prescription drugs from foreign countries – as done by 2% of U.S. consumers in 2011 and 2012 – is likely not an effective public health solution.

The National Bureau of Economic Research conducted a study in 2014 that found that price regulations significantly delayed the launch of new drugs.