Question

Short Story: People in America often wonder why we pay higher prices for pharmaceutical drugs versus countries that have socialized medicine like Canada, Great Britain, and Sweden. Here is the dirty little secret. These socialist governments often threaten U.S. pharma firms that they will steal the patents or outright reverse engineer the drug to figure out the formula. If they do this then they will get the drugs fast and cheap while the U.S. pharma firms get stuck with the total cost of the billions they spent on research and development on these life-saving medicines. This is dirty.

These socialist governments then negotiate a deal with the U.S. pharma companies to get the drugs shipped to them at a cheaper price and Americans end up paying higher costs. In a sense, American capitalism is supporting government-run healthcare in these socialist nations.

Of course, U.S. pharma firms are not innocent angels either. They do their best to maintain the monopoly on their drugs for a full 20 years before they will allow the production of generic drugs by all pharma firms.

Many of the new drugs that have been invented over the last 30 years was because of the hard work of the U.S. government-funded National Institute of Health and the bright professors and students in our leading universities such as UC Irvine Medical Center, UC of San Francisco, etc… All of this activity is actually funded by the U.S. taxpayer.

Finally, because of the endless bureaucratic red tape and expensive testing rigor demanded by the U.S. Food & Drug Administration, the average cost to produce a new drug is about $2.2 billion.

Essay Question: What a mess! What ideas do you have for this Oligopoly market structure to get U.S. pharma drug prices lower for the average American?     

Answer 1

The United States is exceptional in that it does not regulate or negotiatge the prices of new prescription drugs when they comke onto market. Other countries will task a govermnet agency to meet with pharmaceutical companies and haggle over an appropriatge price. These agencies will typically make decisions about whether these new drugs represent any improvement over the old drugs - whether they are even worth bringing on to the market in the first place. They will pore over reams of evidence about drugs' risks and benefits. Lowering drug profits would make pharmaceuticals a less desirable industry for investors. And less investment in drugs would mean less research toward new and innovative cures. US spend more per capita income than any other countries in the world.

There are some regulatory bodies to see the price is reasonable or higher on whatever is already on the market. These regulatory bodies generally evaluated two things. whether the countrey wants to buy your drug and, if so, how muchy they will pay for it. These decisions are often related as regulators evaluate whether your new drug is enough of an improvement on whatever is alreadyon the market.

In some other counties do not regulate the price of other things hat consumers buy, but they have made the decision to regulate the pries of drugs to ensure that medical treatment remains affordable for all citiszens, regardless of their income. Medsication is treated differently because it is a good that some consumers, quite literally cannot live without it.

There are moredrugs on the American market, that doenot mean all patients can access them. If the drugs are so expensive that you can't afford them, that is funcationally the same thing as not even having them on the market.

In United States it has no government panel that negotiates drug prices. There are thousands of health insurance plans all across the country. Each has to negotiate its own prices with drugmakers separately. Because Americans are fragmented across all these different health insurers, plans have much less bargaining power to demand lower prices.

Drug prices can be controlled in US if proper Federal regulations introduced. Stop the rebate and co-pay card games. Allow the Goverment to negotiatge drug prices. Reduce or eliminate patent exclusivity loopholes. Govt's control is very crucial in regulating drug prices. It is important ro review the drg formulary of your insurance plan. Ask for pharmacist if a generic drug is available. Generic drugs are identical copies of certain brand name drugs that have been on the market for a while. These medications are usually available at a lower cost than the brand name drug and can be substituded by your pharmacist. Another ways of reducing the drug prices are Look for manufactuers coupons, check online for patient assistance programs and compare prices at several pharmacies. etc. etc.