What is the deal with prescription drug costs?

Medications have their price, but as costs continue to rise, more people cannot afford to fill their prescriptions. Whether or not this trend of not taking prescribed medication affects overall morbidity and mortality remains to be seen. However, in the meantime, millions of Americans wonder why they are in the position of having to choose between their medication and food for their family.

The general narrative from pharmaceutical companies is that costs are high because it takes a lot of money upfront to pay for research and development of new medications. Research and development (R&D) is certainly expensive, between drug discovery, clinical trials and manufacturing.

{mosads}At least manufacturing costs have come down, since the majority of U.S. pharmaceuticals are outsourced to foreign countries, such as China and India. Marketing the finished products is apparently even more expensive than R&D, not to mention lobbying and campaign contribution costs. All of these expenses add up, as do the profits.

The insurance companies complain because they are not allowed to negotiate prices. These payers do benefit, however, as they receive rebates on a quarterly basis from most drug companies. Insurance companies also share the burden with their customers by raising copays. There are even more stealthy ways to not only recuperate costs but to profit from the trillion dollar worldwide industry.

How else do pharmaceutical companies work it?

In August, we learned that Americans are forced to pay over twice as much on average for prescriptions as people in comparable nations pay for the same drugs, thanks to the work of Aaron S. Kesselheim, M.D., J.D., M.P.H. and his colleagues at Harvard University. Their expert analysis also offered some important insights, as well as possible solutions, for the origins of high drug prices in the U.S.

After reviewing the medical and health policy literature from January 2005 to July 2016, the authors reported, “The most important factor that allows manufacturers to set high prices is market exclusivity, protected by monopoly rights awarded upon the U.S. Food and Drug Administration (FDA) approval and by patents.” Other factors also contribute to high costs, such as prescriber choice and availability of alternatives.

Market exclusivity

Market exclusivity is the right of a company to sell any tested and approved new drug exclusively for a period of about five to 12 years. This right allows pharmaceutical companies to regain what they spent for R&D. In the U.S., companies have no limits on what they can charge for drugs, and this period of monopolization allows them to charge whatever they want. Of course, lobbying, marketing and campaign contributions add up as well, so there are ways to take advantage of market exclusivity to prevent competition for as long as possible.

The exclusive period can be extended by coming up with slightly different formulations of a product (new and improved), testing and marketing the product for a different use or patient population (such as children’s formulations), or by not selling generic alternatives. Interestingly, the FDA currently is preventing thousands of generic drugs from entering the market, even though generics would lower prices and add all of the other benefits of a competitive market.

What can be done right now?

Kesselheim and colleagues suggested five solutions in August, but none so far have been implemented. Most of the suggestions would require cooperation between patients, prescribers, payers and policymakers. Considering the fact that millions of Americans don’t fill their prescriptions due to cost and, therefore, don’t take the medication they supposedly require, implementation of solutions must become an immediate priority.

Realistically speaking, stricter regulation is unlikely to bring about a solution to the high cost of prescription medication. What is needed is accountability from all parties involved, but that is unlikely to magically happen in the current system. Patients may be better off to educate themselves about their own health, health care and health care system, so that they can make informed decisions for themselves and their families.

Patients who need medication they cannot afford can speak to their health care provider about generic forms, alternative medications and the availability of samples. Pharmacists might have information about prescription assistance programs or other alternatives, which vary by state. Medicaid is available to those who qualify, and it covers prescription medication.

If current trends continue, the U.S. may continue its current trajectory toward returning to its developing nation status. Then the citizenry will have no other choice but to return to natural forms of healing and medicine, which are, at the very least, less expensive. It would be interesting to see whether doing so might stop the life expectancy in the U.S. from continuing its current decline.