Essay on an Overhaul To Deal With High Healthcare Costs
Number of words: 1201
US healthcare spending has increased by over 4 percent for the last five years, reaching over $11,000 per person or over $3.8 trillion. This accounts for 17.7 percent of the GDP. As more companies hike drug prices, healthcare is seen more as an industry of making astronomical profits than as an industry of saving and preserving human life. In Drug Prices by Committee: One Way Biden Could Lower Costs, a New York Times article dated February 12, 2021, the writer outlines how pharmaceutical companies are to blame for the increased cost of receiving medical care. Frakt (2021) reports that prescription drugs in the United States are set at three to four times higher than other developed countries such as Britain and Japan. It is a paradox that these companies have hiked the prices of prescription drugs even though their goal is to prolong human life through scientific medical research. The government must enforce policies that would result in the reduction of prescription drug prices. Furthermore, if these companies also act in good faith when pricing these drugs and are not driven by greed, Americans can benefit as they receive quality care at affordable costs.
Caskey (2007) argued that pharmaceutical companies spend more on innovation to develop and produce prescription drugs. Similarly, Frakt (2021) points out that companies will have less incentive to invest more in research and development when the cost of these drugs is reduced. Frakt states that American pharmaceutical companies have a considerable stake in the manufacture of prescription drugs. In addition, pharmaceutical companies such as Turing have now and again defended the reasons behind the increased cost of drugs and the secrecy behind the entire operation. First, they argue that the cost of producing a new drug is high considering that they spend millions of dollars in research and development. While this may be true for some new drugs, it is not the case for already established drugs. For example, the cost of producing a vial of human insulin is around $3; however, the market price for the same vial is $98 for the older version, which can go up to $300 per vial for newer versions (Cohen, 2021). It is ridiculous to justify this high price even if the cost of packaging and distribution is included when calculating the final price paid by the consumer. Similarly, why would a company such as Turing Pharmaceuticals acquire rights to Daraprim and increase its price from $13.50 to $750, a 5000% increased as mentioned in BBC? Even when the patient does not pay out of pocket but relies on insurance, the premiums are high.
Some companies still argue that if prices are capped, they would be forced to reduce their spending on research and innovation, which would limit the introduction of new efficient drugs. However, this can also be refuted considering that the government also sometimes contributed to the cost of research for new drugs when it deems that the new drugs are crucial for the survival of many people. Cleary et al. (2018) state that the national institute of health (NHI) partially funded the development of the 210 drugs approved by the FDA between 2010 to 2016. Researchers such as Caskey (200), who are used to point out that NHI funding had reduced and that their involvement in funding public research also reduced cannot be relied on any longer as it has been years after his article was published; more changes have taken place. As more regulations are put in place, the government agencies are now more involved than ever in funding for research, begging the question as to why pharmaceutical companies still hike drug prices.
Li and Li (2021) point out that patients set high demands for pharmaceutical drugs meaning that manufacturers have to invest more capital and human resources for innovation purposes. It is argued that this forces the companies to pass down the cost to the final consumer. While quality care is the primary element of development in the healthcare sector, does this have to be high costs? Do Americans have to toil and suffer to afford quality care, a basic need that they cannot live without? One of the biggest problems is that the level of secrecy in the cost of research is high, leaving room for these companies to create a fictitious cost of research and development. The healthcare industry lacks transparency in pricing, something that needs to be looked into. Further involvement by the government in this sector should be welcomed, considering that the staunch selfish capitalists who have managed to manipulate the American free-market concept have captured the healthcare industry. When one looks critically at the healthcare industry, one realizes a company such as Pfizer has acquired rival firms such as Warner-Lambert, Pharmacia, and Wyeth in 2000, 2002, and 2009 respectively, creating a pharmaceutical giant that monopolizes the market and dictates pricing. In addition, the merger of SmithKline Beecham and GlaxoWellcome in 2000 also created a pharmaceutical mammoth giving it the power to price their products in whichever way they see fit. It gets worse when such companies influence legislation to support their business. They do this by funding lobbyist groups to drive their agenda and offering campaign contributions to politicians to push for legislation that favors them.
The American government can intervene on the high pharmaceutical costs through strict legislation that calls for transparency into the cost of research and innovation. Furthermore, companies should be forced to declare, after a thorough audit, the actual costs they incurred in research and development to ascertain that the price tags of drugs are commensurate with the claim of the high cost of production. Patients demand high-quality drugs because they need these drugs for survival. However, they should not be subjected to punitive business practices that are only set to benefit the greedy companies who care less about the patients but more about their financial statements. The final take is a proposal to the American government to reduce drug pricing by regulating innovation to support care access. When the cost of prescription drugs is managed, more people will access affordable but quality care.
BBC (2015, Sept 22). US pharmaceutical company defends 5,000% price increase. BBC. https://www.bbc.com/news/world-us-canada-34320413
Caskey, C. T. (2007). The drug development crisis: efficiency and safety. Annu. Rev. Med., 58, 1-16
Cleary, E. G., Beierlein, J. M., Khanuja, N. S., McNamee, L. M., & Ledley, F. D. (2018). Contribution of NIH funding to new drug approvals 2010–2016. Proceedings of the National Academy of Sciences, 115(10), 2329-2334.
Cohen, J. (2021, Jan 5) Insulin’s out-of-pocket cost burden to diabetic patients continues to rise despite reduced net costs to PBMs. Forbes. https://www.forbes.com/sites/joshuacohen/2021/01/05/insulins-out-of-pocket-cost-burden-to-diabetic-patients-continues-to-rise-despite-reduced-net-costs-to-pbms/?sh=1273ff5640b2
Frakt, A. (11, Feb 2021). Drug prices by committee: One way Biden could lower costs. The New York Times. https://www.nytimes.com/2021/02/11/upshot/biden-drug-prices.html
Li, Z., & Li, X. (2021). Will Innovation of Pharmaceutical Manufacturing Improve Perceived Health?. Frontiers in Public Health, 9, 647357. https://doi.org/10.3389/fpubh.2021.647357