According to a recent study by the OECD, Americans pay more than 1200 US dollars each year on prescriptions alone, which is more than any other country in the developed world. And the gap is even more staggering when we start looking at some specific medication classes.
For many years, pharmaceutical companies maintained that the high prices were mainly the result of research, development in innovation. But many observers and studies are contesting this idea and it seems that some pressure is exerted by pharmaceutical companies to intentionally push up the price of drugs currently available.
The Numbers
Antibodies.com recently released a study called The Cost of Living (and Staying Alive) where they compared medication costs and the amount of money spent on healthcare in different developed countries.
The US not only spends more than any country on medication but it is the country in the world where Insulin is the most expensive. As a matter of fact, Americans have to pay over $10,000 per year for a supply of Novolog, the lack of which could have life-threatening consequences. And that was despite recent calls for a price reduction. As a result, many patients suffering from type 1 diabetes are finding themselves having to ration their doses, which can lead to dangerously low blood sugar levels and death.
One of the reasons behind this is the lack of uniform healthcare. Pharmaceutical companies can then charge whatever they want for medicine, as long as the market allows it. In countries like the UK, the government has more of a say on how much it will pay for medicine, which allows for some control over prices.
Insulin is not the only drug where Americans pay the most. According to a Bloomberg report, the cost for six of the most popular medications is £3,934.50 more on average in the US than in the UK. Drugs like Humira will cost an American about 49% of their annual salary on average for a one-year supply.
Americans pay more for Humira than in any other country in the world by far. This injectable medication is used to treat a variety of issues such as psoriasis and arthritis. The drug is very popular at the moment and around £11 billion was spent on the medication last year worldwide.
While the drug will cost you around £660 in a country like Switzerland, and around £1,050 in the UK, US citizens can expect to pay more than £2,000 for the same prescription.
Pharmaceutical Companies are Intentionally Inflating Price on Brand Name Medication
According to a study that was published in Health Affairs, researchers tried to find out how much of the rise of the price of prescription drugs had to do with newer, more expensive medication entering the market or manufacturers simply pushing the price of existing medication up arbitrarily.
It found that the cost of brand name injectable and oral drugs jumped 15.1% and 9.2% respectively and was primarily caused by inflation on existing drugs. But when it came to specialty drugs, 71.1% of the increase could be attributed to new oral medications and 52.4% on injectable medications. The rising cost of generic drugs could also be attributed to new medications entering the market.
The Real Reason Behind High Medication Prices
The biggest factor why prices are so high in the US is simply the US’s attitude towards regulation. Americans by and large support open markets, and so does their government. As a result, no regulation is imposed when medications are introduced to the market.
In other countries, on the other hand, a regulatory agency will be in charge of regulating prices and negotiating on behalf of the government. And the government, as a buyer, has much more buying power than individuals, which forces pharmaceutical companies to negotiate prices even more.
Not only will these agencies be tasked with negotiating prices, but they will also evaluate whether new medications should be introduced and whether they’re a significant improvement on older medication. This prevents pharmaceutical companies from flooding the market with an incessant flow of new drugs with mainly the same composition and charging consumers more in the name of innovation.
Pharmaceutical companies are free to charge whatever they want for their medicine, and this is reflected in the high co-pays and the inability of patients to get access to life-saving medication.
The worst thing in all of this is that lowering prices on medication would not necessarily be for the better. Lower prices would eventually mean less profit for investors and companies, who will be less incentivised to invest in innovation.
Other Countries View Medication as Public Utility
Countries like Britain, Australia or Canada may not impose regulations on other consumer products. However, they, like a number of other countries, have made a commitment to making healthcare and medication affordable to all. Regulation is imposed on medication because it is something consumers literally can’t live without.
However, these policies will often have trade-offs to keep costs under control. Countries such as Australia, for instance, have tight regulations on which drugs they approve. These choices might be motivated by concerns about the benefits of a drug in some cases, but in other cases, decisions are purely financial.
If they feel they can get roughly similar results using a cheaper drug, they will. What this means, however, is that certain drugs might not make it to their shores, which often sparks public outrage among patients aware of a new drug’s benefits. What people often forget is that while some drugs might indeed be available to Americans, this is far from being the case for all of them, given their exorbitant price.
Conclusion
The US medication issue is a complicated one, and one that is largely the result of an unregulated market. Unfortunately for US citizens, healthcare policy tends to favour open markets, which could make efforts to regulate the industry and keep prices under control difficult, unless there’s a major shift.
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