What is a fair price for life saving drugs? This ethically challenging question is one that may not have a correct answer. Take for example the fictional company “Alpha”. Alpha has developed a new drug that is an effective treatment HIV. Before this “breakthrough”, the previous plan for HIV treatment included patients being required to take multiple pills at several different points throughout the day. Alpha company’s drug needs to only be taken one time per day and has shown to provide more consistent treatment rates with fewer side effects. Alpha spent over 100 million to develop the drug, which can now be made for only one dollar a pill. The pills are generally not covered by insurance plans, for the older “cocktail” of medications that patients had previously been taken is more affordable and still meets treatment standards. Alpha company’s drug price is $1,000 a week whereas the current treatment plan costs $500 a week.

Is there a solution? Of course the above scenario is completely fictional, but what options do our elected officials have to regulate (or not regulate) this trillion dollar industry. Could Alpha create a free drug program to cover the costs of those who need it the most? What about lowering their cost to the point that insurance companies would be willing to buy it?

For decades, the high cost of prescription medicine has been a problem in the United States as it continues to rise year after year. Americans are spending more on prescription drugs than any other country. It can be hard for people to determine the origin of this problem because the topic is murky, convoluted, and complex. According to Bloomberg, the path prescriptions take from manufacturing to the consumer is costly and inefficient. Starting with the manufacturers, prescription drugs travel to the wholesalers who sell them pharmacists before they reach the consumers hand. This chain enables price increases at several points, with increases year over year totaling between 9-15% for the past decade. As a result, it is not uncommon  for people to skip days or refills of their medicine because it is not affordable. Imagine being in a situation where you are forced to borrow money, skip out on food, or even pick between your medicine or your rent.

Going back to my example of “Alpha” company, why wouldn’t they just reduce the cost of the drugs to even 25% of what they are currently charging? Well – here’s where it gets complicated.

What level of responsibility does the pharmaceutical company have to provide competitive wages for its employees, and returns for its stockholders? What about the necessary money they will have to make on this drug to continue to innovate and create new medicine? Unfortunately, this “responsibility” has left some patients with no availability to life sustaining drugs.

Insulin, a prescription drug diabetics depend on for survival, has been around for decades and its cost is escalating. “A federal report that said 40 percent of branded pharmaceuticals in 2015 were not subject to rebates, yet prices on those drugs continue to rise,” (Rowland 2). This has led to higher health insurance cost, insurance premiums, and out of pocket expenses for the consumers. Additionally, the lasting effects are hurting the uninsured, underinsured, people with high deductible plans, higher premiums and tax payers.

There is a large dissatisfaction for what some people believe is the largely for-profit health care system. Suggestions on policy efforts to control health care spending have been made, such as putting a cap on how much pharmaceutical companies can increase list prices. It was also proposed that there be price increase transparency. “I feel like I need a Ph.D. in prescription drug pricing to understand how the heck this industry works,” said Senator Maggie Hassan, Democrat of New Hampshire,” (Pear 1).

What can we do as college students in the interim time period before regulation can change this ongoing problem? We can help spread awareness, both of the problem and current resources available. An example, although not a solution, is the absence of knowledge about an app called GoodRX that can tell you where you can currently get your prescription the cheapest in your area. With the cost of a prescription at the counter being the main unsettlement for patients, the chief executive of Pfizer supports efforts to eliminate rebates paid to health plans and middlemen. ““None of the close to $12 billion of rebates that Pfizer paid in 2018 found their way to American patients,” Mr. Bourla said,” (Pear 3). He believes the benefit of such price concessions should be received by patients at the pharmacy counter.  

An example of how it is not just the price at the counter that is a problem but that our system is convoluted is with Mr. Brandicourt. Mr. Brandicourt served as Chief Executive Officer at Bayer HealthCare Pharmaceuticals Inc. and he said “The net price of our insulin product Lantus has fallen over 30 percent since 2012, yet over this same period, average out-of-pocket costs for patients with commercial insurance and Medicare — before the benefit of any Sanofi financial assistance program — has risen 60 percent,” (Pear 4). This exemplifies it is not just drug prices rising but it is also our system.

Patients often request cost controls on prescription drugs, but that might not be the answer. As a matter of fact, Higher costs on branded drugs incentivize and attract community’s talent and assets to the biopharmaceutical business to support and explore new remedies and treatments that will eventually become inexpensive generic drugs. These leading generics represent a precious and under appreciated resource we have.

This issue can be hard for someone to grasp when other countries have the same drug for a half, or even a third of the price. Richard A. Gonzalez, the maker of a best-selling drug for arthritis, Humira, as well as chairman and chief executive of AbbVie, said his company “made profits in countries like Germany and France where prices of brand-name drugs were often much lower than in the United States,” (Pear 1). Trying to understand what it is that needs to be done to counterbalance prices here in the United States compared to other countries, Trump made a few proposals. Drug company executives said under such proposals we “would be importing price controls from other countries where coverage of costly new drugs is sometimes delayed or denied,” (Pear 2). Patients here in America have access to medicines around two years earlier than in other countries, resulting in greater improvements in cancer survival rates.  

A law professor at the University of California Hastings, Robin Feldman, spoke about the topic. She has a particular expertise in antitrust and patent issues. Feldman sheds light on the creativity of drug companies’ legal departments and how they have developed strategies to maintain their power position in the market. She says they try to keep cheaper drugs from entering the market. ””It is very simple. Drug companies are able to pay PBMs — as well as hospitals and some doctors — to make sure cheaper drugs are left out. It’s as simple as that. Drug companies pay everyone along the way so that lower-price drugs lose,””(Nocera 1).

One of the drivers of the American economy is entrepreneurial innovation. What protects innovation is our ability to patent things we create, which last for seven years. As a result, we stand at a crossroad with an odd juxtaposition; should we allow a life saving drug to be withheld from the oppressed population which cannot afford it, all for the sake of helping drive future innovation? There is not one correct answer or solution, other than an understanding that we are facing a growing problem that is effecting everyone’s lives that isn’t talked about enough. Some suspect that as the current aging population of baby boomers requires more medication to maintain a healthy lifestyle, we will see this topic more often discussed both politically and in our day to day lives.

Works Cited & Picture Credits

Blumberg, Yoni. “Here’s Why Many Prescription Drugs in the US Cost so Much-and It’s Not Innovation or Improvement.” CNBC, CNBC, 14 Jan. 2019, http://www.cnbc.com/2019/01/10/why-prescription-drugs-in-the-us-cost-so-much.html.

Nocera, Joe. “Why Big Pharma Is Winning the Drug Price Wars The Creativity of Drug Companies’ Legal Departments Keeps Them One Step Ahead.” Bloomberg.com, Bloomberg, 8 Apr. 2019, http://www.bloomberg.com/opinion/articles/2019-04-08/why-drug-prices-keep-rising-despite-congress-s-efforts.

Pear, Robert. “Drug Makers Try to Justify Prescription Prices to Senators at Hearing.” The New York Times, The New York Times, 26 Feb. 2019, http://www.nytimes.com/2019/02/26/us/politics/prescription-drug-prices.html.

Pianin, Eric. “The Fiscal Times.” The Fiscal Times, 2 Dec. 2015, ttp://www.thefiscaltimes.com/2015/12/02/Why-US-Being-Gouged-Drug-Prices-Compared-Other-Countries

Rowland, Christopher. “Drug Industry Defense for High Prices: Blame Insurance Companies.” The Washington Post, WP Company, 25 Feb. 2019, http://www.washingtonpost.com/business/economy/drug-industry-defense-for-high-prices-blame-insurance-companies/2019/02/25/cc0151ce-35e7-11e9-a400-e481bf264fdc_story.html?noredirect=on&utm_term=.50e3f252c1ad.