Last updated: August 28, 2019
Topic: BusinessMarketing
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The prices of prescription drugs in the United States are by far the highest in the world. [1] On average, Europeans pay 40% less than Americans for the same medications. [2] Consumers have been resorting to several ways, sometimes putting themselves in harm’s way, to alleviate the burden of high prescription drug costs. Some buy their medications online or cross the borders to neighboring countries so they would be able to afford buying their needed medications.

Others have resorted to the illegal act of selling their unused medications in online forums just to recover part of their expenses. Many factors contribute to the increased drug prices in the United States including research and development costs, FDA rules and regulations, the lack of government price controls and liability costs. With more than 10 million people bringing in medications through the borders and 2 million international packages containing pharmaceutical products arriving annually,[3] American consumers spend billions of dollars on “imported” drugs per year. 4] Many uninsured people purchase cheaper prescription drugs online from countries like Canada, UK and India saving between 60 to 80 % off the US prices. The problem with this practice arises from the fact that consumers do not know if these medications are exactly the same as the ones prescribed to them which puts them in harm’s way. Many medications have different forms (long acting, slow release…etc) and a layperson might not be able to distinguish between those forms. Another issue is that many dugs manufactured outside of the United States do not abide by the U.

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S. safety regulations and their doses could be different from their actual “claimed” levels and some have impurities or toxic substances such as lead. All of these factors combined should urge a decrease in prescription drug prices to encourage this high number of consumers to drop these potentially harmful practices. Surprisingly, the costs of developing and obtaining FDA approvals for new drugs surpass the costs of manufacturing them later on. It is reported that the initial cost of developing a new drug and getting it FDA approved is approximately $800 million. 5] With a return of 17% on revenue, the pharmaceutical industry topped the list of the most profitable businesses in the U. S. [1] The pharmaceutical companies represent a very strong economical power that can not be ignored and they have tremendous support of lobbyists in Washington who would lobby Congress and protect their interests. The pharmaceutical industry spent $855 million, which exceeded the expenditure of any other industry, on lobbying activities from 1998 to 2006. 6] Having such strong congressional support helps pharmaceutical companies gain “immunity” against any changes in laws that would enforce price controls or protect the consumers’ interests.

Pharmaceutical companies and their supporters argue that the prices they set are necessary to ensure a continuous research funding. [7] However, critics of pharmaceutical companies say that only a small portion of those expenses are used for research and development, with the majority of it being spent in the areas of lobbying, marketing and administration. 8] The FDA has been criticized by many and was partially held responsible for the inflated costs of research and development of new drugs. Many studies estimated that a new drug costs approximately $800 million until it is brought to the market, [9] and it has been estimated that about 29% of the cost of development is spent on FDA-required clinical trials. [10] Those mandated clinical trials delay the marketing of new drugs which forces the pharmaceutical companies to raise their prices in order for them to make up for lost time. … longer development times increase R&D costs and shorten the period during which drug companies can earn the returns they need to make investment financially viable. Other things being equal, longer development times reduce innovation incentives. As a consequence, fewer new therapies might be developed. “[11] Patent protection laws are yet another reason for the inflated prices. Pharmaceutical companies are provided with temporary monopoly rights on the production of new drugs which result in a higher cost on consumers.

If competing companies were allowed to produce generic forms of those drugs, consumers will be able to afford those medications even in cases where those consumers have no insurance coverage. The company responsible for developing and inventing the original medication could be offered incentives to invent in the future by either obtaining tax breaks or NIH funding for future research. They could even be offered a percentage of the sales of the generic drugs. Economist Gary S. Becker advocates dropping many FDA requirements that, in his opinion, provide no additional safety measures but rather delay the development of new drugs. [12] Betamethasone, for example, has been part of the standard prenatal care in Europe since the late 1970’s while it got adopted in the U. S. after 1997. On many occasions, the FDA ignores all scientific evidence concerning certain drugs because the manufacturer did not follow their mandated bureaucratic standards.

Many countries such as Canada, India, and the UK have price controls. The governments of these countries impose regulations that control the prices of new drugs as well as generics without compromising safety but at the same time they do not burden pharmaceutical companies with unnecessary rules and regulations. Attempts to impose such controls in the United States have been met with great opposition which brings us back to the lobbying powers of pharmaceutical companies and their effect on decision makers in DC.

The safest substance on Earth, water, has potential lethal side effects if used improperly, i. e. inhaled rather than ingested or even ingested excessively. All medications or medical interventions have side effects that might appear under very specific circumstances or a long time after exposure. A patient enters a moral agreement that he/she accepts the “announced” side effects of a treatment hoping it will alleviate the burden of his/her illness.

In some cases where pharmaceutical companies intentionally hide or unintentionally missed to pick up a certain side effect during the research period, both the company and the FDA should be held liable and their trials should be held in criminal instead of civil courts. Many patients treat their health as a “lottery ticket” hoping that certain treatments would go wrong just to cash-in a big settlement which might not be a big problem for pharmaceutical companies that could afford such large settlements as long as they could increase prices of future developments.

If companies knew they would be held criminally accountable for their actions they would be more careful not to intentionally hide any side effects and be more vigilant during the research and development period. With the current economic crisis, many Americans are suffering due to the burden of bills they can not pay and due dates they are unable to meet. These current economic circumstances should be the motive for a complete reform that would address all the responsible parties to be able to reduce the prices of prescription drugs and hence alleviating some of the burden off already burdened American families.