Pharmaceutical companies play an important role in healthcare. They are able to convince people and medical facilities that every drug formulated helps cure a certain sickness. People need the drugs in order to survive after seeing a doctor. Drugs that are formulated are made to treat and cure sickness and diseases. One major healthcare topic that is an issue of the healthcare financial policy is rising cost of pharmaceutical companies has become a concern for citizens. The price for prescription drugs is too high and continue to increase. Due to the high cost of prescription many people are not able to afford for their drugs. Some people who are unemployed or have no health insurance are unable to afford for their drugs. The purpose of this paper is to understand how the rising cost of prescription drugs has an impact on healthcare and citizens. Also, the purpose of this paper is to understand how the rising cost of prescription drugs became one of the major issues of the healthcare financial policy.
The pharmaceutical industry is part of the healthcare sector that manufactures medication. Medication is prescribed by doctors to individuals who are sick. Pharmaceutical companies manufacture generic and brand name drugs. Brand name drugs are being more advertised and to be more efficient. Brand name drugs are increasing and driving force for-profit for pharmacy industries. In order to get to make profit, the industry began to market and advertise their drugs. They began with commercials and directly advertising the drugs to physicians and medical facilities to prescribe to their patients. In the healthcare industry, adverting drugs on television and to medical offices is a good strategy pharmaceutical companies can use. Patients become more “knowledgeable” and curious about their options of medication and demand their physicians to prescribe them the medicines advertised on television. Physicians and pharmacies also fall for advertisement of the drugs. Due to growth and long-life expectancy of aging population and increasing healthcare demand, and of increased demand and access to healthcare, pharmaceutical industry continue to grow a profitable. According to Glode & May (2017), the reason for high cost of prescriptions is due to research, development, longer clinical trials required to achieve drug approval and the manufacturing of the drugs.
Medication have become very expensive for individuals to be able to afford. Even with health insurance, they do not cover for the cost prescriptions. Also work companies do not also cover a large chunk of healthcare for their employees. Employees have to pay out of pocket for their healthcare and medication. Due to the expense of healthcare, many are not able to pay for prescriptions referred to them. Seniors are the ones who are more affected by the rising cost of medications.
Many medications that are once advertised as FDA approved and safe later become a drug that is harmful, and the industry can be sued. Even though, pharma companies are being sued, they continue to advertisement new drugs and make profit. In 2006, the U.S. Food and Drug Administration approved drugs put that should not have been approved. “A program designed to bring so?called grandfathered medications up to speed with modern safety and efficacy standards. These included 5000 medications that came to the market prior to the 1962 Kefauver?Harris Amendments, which required that drug manufacturers disclose efficacy and side?effect information, a regulatory change spurred by the thalidomide tragedy” (Flannery at el. 2017). When research is conducted on the drugs to make sure it is safe and effective, the drugs prices increase. Also when there is a shortage of medication or not enough medication is formulated than the prices skyrocket. Medication that are scarce are sold at a high cost. The pharmaceutical companies always have a tragedy on how to make profit from the economy. According to Flannery at el., in 2012, the United States spent $328 billion in overall pharmaceutical sales, which was double that of France, Germany, Italy, Spain, and Britain combined (2017). Also in the free market economy, prices for goods and services are determined by supply and demand of the medication. The price of a pharmaceutical drug increases due to demand by individuals and healthcare providers. Patients who are sick need the medication for survival. Individuals have no choice but to purchase the medication. Medication is also helping individuals live longer and because of that there is more demand for the medication. When companies are not regulated by the government prices can increase. There is no price control.
Cancer and ICU medications are very expensive. Cancer medications must go through research and trials to make sure it is efficient and not harmful. Medication for cancer continues to increase because there is different medication always being researched and clinically trialed for its efficiencies. “In the United States in 2015, the total cost of oncology medications rose to $37.8 billion from $15.9 billion in 2010. The costs for protected brand?name drugs increased by $9.6 billion due to broader use of these agents and increasing prices. From 2010 to 2015, generic oncology drug costs rose $1.5 billion, which equates to 10% growth in this area (Glode & May, 2017). Rise of pharmaceutical drug has a negative effect on individuals because they have to save or find options on how they can afford for their medications. It puts strain on the economy. Older medication has increased in price due changes in the generic market and has become frustrating for health care professionals and their patients (Chumock, & Vermeulen, 2017)
According to Koons 2015, prescription drug expenses are nearly 20 percent of health care costs. In healthcare, Prescription spending is growing faster than any other part of the health care. There is more money invested into prescriptions. Well known drugs that were once low in pricing began to increase as well. In 2014, the largest yearly increase with prescription drugs of 13.1 percent. There was a 30.9 percent increase due to the demand of specialty drug. In 2015, spending rose another 12.2 percent (Koons 2015). In 2017, there was 44 percent Specialty drug. Spending on 10 breakthrough drugs alone will cost just three government programs nearly $50 billion over a decade. In 2013, AARP report shows the annual income for specialty prescription drug therapies in 2013 averaged $53,384. Prescription drugs are costlier than the average income of households. The median US household income ($52,250), median income for Medicare beneficiaries ($23,500), the average Social Security retirement benefit ($15,526). The average income for Americans is less than what prescription drugs cost. Over the past five years, specialty drugs have increased by $54 billion (Koons 2015). Specialty drugs are medication that require special handling, administration, or monitoring. They are medication such as cancer, asthma, HIV prescriptions. These drugs are always in demand. Spending on specialty medicines account for 73 percent of all medicine spending growth. “Four of the top 10 prescription drugs in the United States have increased in price by more than 100 percent since 2011 Pfizer Inc., the nation’s largest drug maker, has raised prices on 133 of its brand-name products in the United States in 2016, according to research from UBS, more than three-quarters of those were increases of 10 percent or more” (Koons 2015).
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