U.S. Pharmaceutical Price Reductions: R&D, Reimbursement, & Determinants - Essay Sample

Regulating Pharmaceutical Prices in the U.S.

Over the past years, the global pharmaceutical industry has not been performing as expected due to challenges like financial strains and recession of different economies. The United States of America is no different (Lindsley, 2017). There have been a lot of emerging issues regarding the prices of pharmaceutical products, which has translated to a deficit in the state and low income for individuals since most monetary resources get used up in obtaining health care products. Statistics show that the prices and the net amount of money spent on pharmaceutical products are higher in the United States than in other developed countries. If this trend continues, more than half of the Gross Domestic Product will be accounted for by Pharmaceuticals. It shows the need for regulating the pricing policies in the industry. This paper will provide a discussion on the challenge of high pharmaceutical prices, the cause, and regulations in America.

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Pricing scandals are a typical headline in the U.S. Aspiring political leaders try to explain the problem and proposed solutions to combat it. The most common explanation of the spike of the prices is the use of new drugs. Biotechnology has incited massive leaps when it comes to biologics improvement. However, biotechnology has also prompted an increase in the prices of pharmaceutical products (Hyman & Kovacic 2017). Despite the advice from insurers to opt for low-cost drugs, patients have complained about the limited access to such. One of the scandals that gained pubic concern is the case of the new treatment plan of Hepatitis called the Hepatitis C. This case is a relevant proof from which it explores the issue of how biologic drugs are provoking unfeasible additions in national prescription utilization. The first vaccine of Hepatitis was discovered about sixty-three years ago. This vaccine and others that came later caused severe side effects, and the treatment were instead time-consuming. With biotechnology, this was changed by Turing Pharmaceuticals, who developed new medication: Olysio and Sovaldi (Hoadley et al., 2016). The combination of the two drugs proved to cause minimal side effects, and people got better within a shorter period. This prompted their approval by the United States Food and Drug Administration. The new medication is in the form of pills, whose price is higher by a margin of 5000%. If Olysio pills are in use, that means one will use $23,600 monthly, and if Sovaldi is used, the total cost will amount to $84,000 for the three-month treatment (Liao, 2018). All factors considered, the prices of these two is extremely high for individuals belonging in all the economic classes. This challenge gets worse since a large number of people need medication. In the year 2014 alone, the sales report show Solvadi made $6.5 billion. The very high prices of hepatitis C medications have negatively affected patients who cannot afford to get limited access. Some of the insurance companies have also denied coverage of hepatitis C due to the high cost of treatment.

The high prices of pharmaceutical products in the United States are due to reasons like free market, biotechnological innovations that require a lump sum of monetary resources, and the main reason being a failure of the government to make pharmaceutical products price negotiations (Hedican et al., 2019). The cost of setting up a prescription available to be purchased to the general population in the United States has been assessed to be about 883.6 million. However, these costs do not reflect those drugs that have not met the endorsement guidelines. Food and Drug Administration does not approve 90% of the drugs that are being developed (Naci et al., 2017). If modified, some of these drugs prove to be useful. This means that the earlier monetary investment that was made goes to waste; hence to recover from this, they are priced at higher values.

It is also essential to put into consideration the criteria from which consumers of pharmaceutical products use involves tenets like information about drug effectiveness, the innovation used, development, and how well a product is advertised. The more a product is advertised, the more its price it will be if at all a company's aim is to amass profit. Some insurance company makes these choices for their covered clients. What these insurance companies typically do is go for the latest or best meds, paying little heed to their general a motivating force to that particular patient. For example, a patient with a less unpredictable Hepatitis C medication may demand Sovaldi, paying little mind to the way that an increasingly settled drug may be correspondingly inclined to fix their ailment, and at a modest quantity of the cost. In this manner, the United States uses more cutting-edge sedates more from time to time than other countries.

The legislation involves laws formulated considering past events, present, and future needs. There are legislations regarding pharmaceutical industries made as a result of accidents that happened at certain times in history. Regulations, on the other hand, involve rules that facilitate the implementation of laws made through legislation. The legislation and regulations of the pharmaceutical industry in the United States are a considerable part designed for the safety of her citizens and the protection of their health (Patterson & Carroll, 2019). Legislations involve a lengthy process that requires the Legislature of a particular country. In the United States, the preparatory period that consists of a series of debates before a consensus is time-consuming. There is a need for the government and the involved stakeholders in the industry to make informal agreements, which will later be formalized as law to regulate the prices currently. One of these informal agreements is the national course of action to cut down the expense of the new prescriptions. Generally, this has been a convincing strategy.

However, using national worth trade procedures is progressively tangled, given the decentralized assurance feature. This has been problematic as a result of the free market structure of the therapeutic administrations system in the United States. Cutting down drug costs causes lessened pay for pharmaceutical associations. In turn, it means decreased innovation since there are no exaggerated profits (Graber, 2017). Subsequently, the competition will lower when there are fewer meds in the market. Finally, the nonappearance of contention keeps up the upward weight on costs.

Nonetheless, various regulatory barriers are existing, that the government should amend to help reduce the process. The Medicare Modernization Act is an example of such a barrier (Costello, 2017). According to Koinig et al. (2018), when the government makes a policy that will regulate advertisements from pharmaceutical companies directly to consumers, the costs of the products will reduce. The degree of effectiveness of policies that are related to overprescribing, or suggesting reliant on headway has been measure singling out diminishing direct-to-customer advertisement. If reduced, that means customers will demand pharmaceutical products less.

References

COSTELLO, M. (2017). Regulating Pharmaceutical Pricing: Why is Europe More Aggressive Than the U.S. The Journal of International Management Studies, 12(1).

Graber, J. L. (2017). Excessive Pricing of off-patent Pharmaceuticals: Hatch It or Ratchet. NYUL, Rev., 92, 1146.

Hedican, V., Bautista, A., &...