High Prescription Drug Costs in The United States
The usage of prescription drugs in the United States has increased over the years as the growth of pharmaceutical industries. A lot people are getting on new prescription drugs as new conditions are being invented. A research titled “Prescription drug expenditure in the United States from 1960 to 2019,” by Matej Mikulic of GBmH, indicates, United States have the most spending in the world since we have the highest drug price, “The United States is the country with the highest total drug spending and also with the highest per capita pharmaceuticals spending among developed countries. This is mostly connected to higher drug prices in the United States. For example, the price for blockbuster drug Humira was more than three times higher in the United States than in Switzerland in 2015.” By comparing to one drug it shows how much patients spend a lot of money on prescription drugs. Pharmaceutical companies are making a lot of money from this and the people on medications are almost paying a lot of money to get treatment but at a higher cost compared to other countries.
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Prescription drugs should be affordable to everyone in need of them. Sick patients or those with underlying conditions should be taken care despite the price tags on the prescriptions. Patients are suffering a lot due to inability to acquire their medication because they lack resources to get them. The purpose of insurance is to ensure that patients are able to get their medication easily without having to pay extremely high prices. It is not a free service since they pay monthly premiums to help them with coverages. The incapability of patients to get their prescriptions filled in an outrageous problem since they are already paying insurance companies who in turn works with the manufacturers and pharmaceutical industries. Their contracts should be able to benefit all the three sides not one side. The high prescription drugs costs have ascribed to government allowing monopoly power to pharmaceutical companies and other corporations making it impossible for patients to afford their prescriptions. The causes and effects of high prescription drug prices are numerous and complicated but has potential solutions can be employed to ensure price are reduced, regulated and make it affordable for patients.
Prescription drug prices is a growing issue in the united states and has been of a never-ending problem in the country. It has been growing consistently within the last years. According to Peter Peterson of the Peterson Foundation, “One of the largest contributors to rising healthcare costs, spending on prescription drugs has been growing exponentially over the past few decades. In 1980, such spending totaled around $12 billion and accounted for about 5 percent of total healthcare costs. By 2016, prescription drugs accounted for 10 percent of healthcare costs, or about $330 billion, and that amount is projected to nearly double within the next decade. In real (inflation adjusted) terms, prescription drug expenditures have increased by almost $300 billion from 1980 to 2016.” The amount of money that patients spends on prescription medication makes up a big portion of United States percent of the economy. The pharmaceutical companies mark up prices forgetting the market they serve to might not consider the prices unfavorable and unrealistic.
Kristy Bishop, the author of Pharmaceutical Industry Developments; Specialty Drugs, Coupons, Reverse Pay and Product Hopping, discloses, “Roughly 10 cents of every U.S. healthcare dollar is spent on prescription drugs ($305 billion in 2014). According to federal data, from 1980 through 2007, U.S. prescription drug spending rose by about 11% annually, on average. From 2008 through 2013, the pace of annual drug spending slowed to about 2% on average” (Pg 7). Through that, the amount of money spent on prescription drugs is a lot and therefore the market for pharmaceutical companies is significant.
The whole country has voiced their anger to pharmaceutical companies about these high prescription drug prices. Many patients feel the actual pain of the ever-increasing drug prices and they have often asking for control over the price controls. High prescription drugs costs of increasing on brand name drugs incentivize and attract the community’s talent and assets to the biopharmaceutical business to support and explore the new remedies and treatments. Which will eventually become the inexpensive generics. Thus, leading generics to be the world’s most precious and underappreciated resource but at an expense of the consumers. Dima M. Qato, a PharmD at the University of Illinois Department of Pharmacy, purports, “The use of prescriptions drugs has been increasing since the 1960’s. In the U.S, 88% of older adults (62-85 years) use at least one prescription drug, while 36% takes take at least five prescriptions drugs concurrently.” That is a huge number of the population not considering the other percent of the population.
The pharmaceutical companies spend a considerable amount of money trying to come up with new drugs. The pharmaceutical companies spend thousands and thousands of dollars in their advertising of the new drugs into the market. This is seen when two drugs of the same condition trying to compete with each other, leading to increase expenditure. These companies use a considerable amount of capital to manufacture drugs and to get them off the ground and therefore, they label the drugs with obscenely price tags to compensate them. Most companies have departments that conduct different functions; research and development and marketing. The pharmaceutical companies. According to Mikulic, “The research and development expenditure of PhRMA members from 1980 to 2018. In 2000, the expenditure of PhRMA members within the U.S. pharmaceutical industry on research and development amounted to 26 billion U.S. dollars.” (“Pharmaceutical research and development expenditure in the U.S. from 1980 t0 2018”). The pharmaceutical companies are spending millions of dollars to complete their researches.
High prescription drug costs are a major issue to both consumers and healthcare organizations. Both parties want benefit from this, but it seems only one party is accruing the negative impacts. Being at least one of the major components of the economy it should be taken seriously and worked on before the industry loses market to other countries with better pricing.
The effects of high drugs are mostly affecting the patients but more so, the patients within a certain age group, certain conditions and low socio-economic status. According to the Annals of Internal Medicine, the author Jane E. Brody of New of Times, writes, “Studies have consistently shown that 20 percent to 30 percent of medication prescriptions are never filled, and that approximately 50 percent of medications for chronic disease are not taken as prescribed,” (QTD New York Times; The cost of taking your medicines). The lack of adherence has caused more problem rather than help out. More patients are ending up in the hospitals because they are not taking their medicines as prescribed. This leads to accruing large medical bills that could be easily avoided if adherence was followed. Insurance companies in turn have to take up the huge bills to cover and hence they have to compensate the bills. In their research study, Dr Luga and Dr McGuire states, “Medication nonadherence leads to poor outcomes, which then increase health care service utilization and overall health care costs. The financial pressure is passed to patients by payers through higher copayments, or via higher costs to employers for coverage.” All of these comes back to the patient since they are the one to cover the cost rather indirectly and hence its not really favoring them but disadvantageous to them more.
Another effect of high cost of drugs is patient based cases of noncompliance for patients with amnesia, and inability to get their prescriptions refilled, picked up and delivered. This has been known to cause noncompliance cases due to early dementia. The lack of proper help with an effective support system to get their medicines. This just verifies that even though the forgetfulness is a very dangerous risk the cost of drugs still accounts for 17% of noncompliance cases while inability to get filled prescriptions on accounts for 10% (Butler). Being noncompliant due to high drug prices is an issue that should be addressed and taken care of. As stated, the number people ending up back in the emergency room since they did not take their medicine as prescribed by their doctor. The skipping of doses is quite harmful to people with long term conditions like diabetes, heart problems, high blood pressure and many other diseases that needs to be taken checked and have control over on a regular basis. Patients would not be nonadherent if they are able to fill their medicine at a more reasonable cost without breaking their budgets especially those on a tight budget.
Furthermore, the high prescription drugs prices are not only influenced by the prices set up by the pharmaceutical companies but also by the prescription drug coverage by the insurance companies. The cost of drugs especially the non-generics are usually high and hence they will affect the cost out of pocket spending when patients get their prescriptions filled. The American Academy of Actuaries attests:
As plan costs for prescription drugs increase, insured member costs will likely increase through higher cost sharing and premium contributions. The Affordable Care Act (ACA) does provide for a maximum out of pocket (MOOP) limit for drug and medical costs combined for the commercial market. The MOOP for 2018 is $7,350 per person per year, which can represent a substantial percentage of income for most individuals. Cost increases to employers and other plan sponsors over the past several decades have resulted in increased cost sharing, increased member contributions to premiums, and even elimination of some employer or other sponsored health plans. Pharmacy claims are subject to the deductible in high-deductible health plans, exposing members to more cost sharing. (“Prescription Drug Spending in the U.S. Health Care System”).
The influence of the pharmaceutical companies marking the prices affects all around, but the insured are the one getting the most effect since they are the ones who have pay their premiums and out-of-pocket or co-pays.
Moreover, the cost of high prescription drugs on health is to analyze the effects of patients purchasing these high price medications and to how it has impacted their hospitalizations. It has being argued that there is fewer hospitalizations due to lower costs of care, “Medicare health maintenance organization that altered its policy from a tiered copay system for brand-name ($15) and generic ($7) drugs and a $200 quarterly drug expenditure cap to unlimited coverage of generic drugs (with a $5 copay) with a high copay ($25) and a cap on brand-name drugs ($25 per month). They found that the policy change was associated with a 4% decrease in patient office visits and a 6% decrease in total health care costs.” (Kesselheim, Aaron S et al. “Prescription drug insurance coverage and patient health outcomes). The rate of change might be minimal but it’s a step that Medicare but trying to bring down the prices for the patients hence reducing the rate at which hospitalizations would decrease. Making prescriptions affordable might just some money for the insurance companies, the insured and the pharmaceutical companies.
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The importation of drugs from other countries has led to the loss of market for the pharmaceutical industries in the United States. Most people if they a had means to go out of country they would probably import more drugs since it means it’s a little cheaper out of states. In the past years there has been concerns of people ordering prescription drugs outside the states; “In 2003, an estimated 12 million prescription drug products entered the United States from Canada via Internet sales and travel to Canada. A similar number are estimated to be coming in from the rest of the world. Some may be obtained pursuant to valid prescriptions, while others may be procured from rogue Internet sites; the government does not distinguish between the 2 in its reports” (Palumbo et al.). There shouldn’t be a reason for patients to go out of the country to acquire their medications yet they are produced in the country.
However, addressing this problem also calls for solutions that will help with prescription drugs prices control and reducing the prices. Even though it’s long overdue since the process to address it has been an obstacle. The pharmaceutical companies need to work with consumers and the government to endure fair pricing for prescriptions. The protection of the consumers should a priority not only but also the financially. This goes both ways since the pharmaceutical needs the market and the government to function and conduct its activities. The growth of pharmaceutical industries has been going up every decade per the increase of the prescription drugs prices. Pharmaceutical companies make huge profits being almost the highest entity of United Sates economy over the years. The prescription drug expenditures being high in the health care cost of the Gross Domestic Product (GDP). Based on the Pharmaceutical Products and Markets, “The domestic and international revenues of the pharmaceutical industry in the United States between 1975 and 2018. In 1975, domestic revenue came to around 7.13 billion U.S. dollars.” They accrue a lot of revenue from both international and domestic markets.
One possible solution is allowing the government to actually pass policies that would help in prescription drugs pricing. This restrict the pharmaceutical companies from setting their high prices without considering what their market is made up of. A consideration should be in place for the people on the lower socio-economic status. Even if the government does not want to want to be in the middle of this stigma there is also a possibility of forming a separate entity that can overlook the prescription drug pricing. This entity does not have to be a profitable organization. The government can employ neutral employees who can work with policies and procedures to ensure there is no overpricing and exploitation of the public. As Madeline Twomey a special assistant for the Health Policy at the at the Center for American Progress claimed, “Under the Negotiation Plus framework, negotiations would be informed by independent assessments of value and innovation. Congress would set standards for U.S. nonprofit organizations to assess the value of drugs, ensuring that these parties are free of conflicts of interest, have transparent methodology, and enforce board representation standards as well as clear priorities for which drugs to assess. Examples of such organizations might include the Institute of Medicine (IOM), the Patient-Centered Outcomes Research Institute (PCORI), or the Institute for Clinical and Economic Review (ICER).” The government can use lawyers with experience in fraud and abuse, medical staff like pharmacists, nurses, doctors, researchers, and accountants who can overlook this procedure. Neutrality in this part would be important since there would be no expectations of kick-backs from the pharmaceutical companies. This is addressed by Twomey also, provides entities already in place. This means it is possible to form new entity all together.
Secondly, educating the public about the importance of the medication they are taking is a proper way to start working the public. The idea of transparency enables the patient to determine if its proper to take a particular drug and if they are able to pay for the them. Many patients end up leaving their medications they are not able to afford them. They have a right to know the price before walking into a pharmacy only to go back home empty hand. Being open about the prices of drugs should be both be enhanced by the physicians and insurance companies. Insurers have formulary of drugs that they can cover and those they are not covering. Informing the physician office and the patient is one way to ensure that patients are aware of what can be covered, what is affordable to them.
Increasing competition between companies would be another way to help manage drug prices in the country. Most pharmaceutical companies lack competition and therefore, they turn to be monopoly since there are not other companies to challenge them with affordable prices. The absence of this has led to the of increase of prices. The government should encourage the growth of companies to produce the same drugs for the same drug that way they can compete with each other. This will encourage pharmaceutical companies to reduce their prices, making prescription drugs affordable and reduce the production expenses since expenses would be distributed, and there would be back order issues. Rather than letting one company taking over, the growth of others should be brought. However, it can be a risky business if there is no proper management. Also, funding might be a problem since it requires a lot of capital to start up a company with research and development department, marketing and advertising and patent laws would hinder the progression. The idea is good, but it would require a lot of materials. To maintain proper discipline for the company from the influence of competing pharmaceuticals would be a challenge.
Provision of discount services to patients it a way of reducing out-of-pocket for patients who have pay a great amount of money for their medications. Most patients will appreciate anything that would help them reduce their expenditure. Patients who have being on the same drug over long period of time its most helpful to them when they have to meet their deductible and they are not able to meet them, yet they need their medicines. These programs should be able to help them pay as they figure out their means of payment their insurers. That way they are not missing their doses and end up getting hospitalized. “Patients with very high deductibles or with high coinsurance requirements may find it difficult to pay the out-of-pocket costs to obtain high-priced drugs. In such cases, patients may need to access assistance programs in order to offset the out-of-pocket costs of starting and adhering to therapy, regardless of their insurance status” (“Factors Influencing Affordability”). Those on continuing treatment should not be off of it.
Most patients are trying to be healthy and lack of proper medication does not make their situation any better. The elderly are the ones mostly on tight budget since they are the one retired and are living on social security paychecks. They are not able to afford prescription drugs that are the same amount they receive their paycheck that is supposed to cover their day to day lives. They need basic needs like food, transportation, essential needs and having to keep up with the never reducing drug prices. They should able to get their prescription drugs without any obstacles.
Pharmaceutical industries should be considerate those on the lower social economic status. People who are making barely the minimum wage are affected more often if they are not able to meet the high prescription drug prices. It is not healthy to miss their dose, but some people would rather save their medications for the time they really need and forego when they feel healthy and their body is functioning better. However, it is not safe because usually people end up worsening their condition. Those will long term conditions like cardiovascular problems, high blood pressure, breathing problems or any conditions that may affect their day to day lives are in higher risks if they are able to afford their prescriptions. They might end up being hospitalized or sometimes more adverse results may occur.
High prescription drug price problems should be an issue high on the list of issues that needs to solved sooner than later. The economy is always growing, and the cost of living is unpredictable, it may turn for the worst or the worst. The pharmaceutical industries should work in hand with the government to ensure the prices are controlled and make affordable to those in need of them.
- Bishop, Kristy. Pharmaceutical Industry Developments: Specialty Drugs, Coupons, Reverse Payments and Product Hopping. Nova Science Publishers, Inc, 2016. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=e000xna&AN=1226172&site=ehost-live&scope=sit
- Brody, Jane E. “The Cost of Not Taking Your Medicine.” New York Times, 17 Apr. 2017, https://www.nytimes.com/2017/04/17/well/the-cost-of-not-taking-your-medicine.html.
- Butler, Amanda. “Patients Reasons for Medication Noncompliance.” Orbis Biosciences, 15 Mar. 2015.
- Qato, Dima M., et al. "Changes in Prescription and Over-the-Counter Medication and Dietary Supplement Use Among Older Adults in the United States, 2005 vs 2011." JAMA Internal Medicine. 176 (4): 473–482. doi:10.1001/jamainternmed.2015.8581. ISSN 2168-6114. PMC 5024734. PMID 26998708., 2016-04-01.
- Kesselheim, Aaron S et al. “Prescription drug insurance coverage and patient health outcomes: a systematic review.” American journal of public health vol. 105,2 (2015): e17-30. doi:10.2105/AJPH.2014.302240
- Iuga, Aurel O, and Maura J McGuire. “Adherence and health care costs.” Risk management and healthcare policy vol. 7 35-44. 20 Feb. 2014, doi:10.2147/RMHP.S19801
- National Academies of Sciences, Engineering, and Medicine; Health and Medicine Division; Board on Health Care Services; Committee on Ensuring Patient Access to Affordable Drug Therapies; Nass SJ, Madhavan G, Augustine NR, editors. Making Medicines Affordable: A National Imperative. Washington (DC): National Academies Press (US); 2017 Nov 30. 3, Factors Influencing Affordability.
- Palumbo, Francis B, et al. “Policy Implications of Drug Importation.” Clinical Therapeutics, vol. 29, no. 12, 29 Dec. 2007, pp. 2758–2767., https://www-sciencedirect-com.ezproxy.paradisevalley.edu/science/article/abs/pii/S014929180700416X.
- Peterson, Peter G. 9 Sept. 2018, https://www.pgpf.org/blog/2018/09/how-will-the-rising-cost-of-prescription-drugs-affect-medicare.
- PhRMA. "Domestic and International Revenue of The U.S. Pharmaceutical Industry between 1975 and 2018 (in Million U.S. Dollars)." Statista, Statista Inc., 17 Jul 2019, https://www.statista.com/statistics/275560/domestic-and-international-revenue-of-the-us-pharmaceutical-industry/
- “Prescription Drug Spending in the U.S. Health Care System.” American Academy of Actuaries, 1 Mar. 2018, https://www.actuary.org/content/prescription-drug-spending-us-health-care-system.
- "Prescription Drug Expenditure in The United States from 1960 to 2019 (in Billion U.S. Dollars)." Statista, Statista Inc., 26 Feb 2019, https://www.statista.com/statistics/184914/prescription-drug-expenditures-in-the-us-since-1960/
- Twomey, Madeline. “Comprehensive Reform to Lower Prescription Drug Prices.” Center for American Progress, 29 Jan. 2019.
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