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Research Papers / Effects of High Prescription drug Prices in the U.S. [2]
Prompt: For this paper, you are thinking about a problem that is negatively affecting society. What is keeping people up at night and how can we work to fix it?
As prescription drug prices soar, millions of Americans are forced to make choices that risk their health, finances, and even lives. This is the reality for many today, and without proper intervention, these rising costs-and the impact on public health-will likely continue. While many argue that high pharmaceutical prices are justified by research and manufacturing costs, it's essential to examine the detrimental effects on healthcare workers, marginalized communities, and everyday consumers nationwide. Moreover, the rising cost of prescription drugs in the U.S. limits healthcare access and worsens health outcomes, highlighting the need for stricter pricing regulations. This essay will explore the historical roots of pharmaceutical pricing, the extent and repercussions of its negative impacts, and proposals for both short-and long-term solutions to alleviate these negative effects.
Up until the 20th century, drug prices remained relatively stable, reflecting production and R&D costs. However, by 2014, generic prescription drug prices in the U.S. had increased by an average of 38%, according to the Generics and Biosimilars Initiative Journal. This sharp escalation begs the question: what caused prescription drug prices to skyrocket? A pivotal factor was the Hatch-Waxman Act of 1984, which extended patent protections for new drugs. While designed to incentivize innovation, this legislation also allowed companies to delay the entry of more affordable generic alternatives, significantly contributing to rising drug costs.
Additionally, prescription drug expenditures saw a significant jump, from $55 billion in 1990 to projections exceeding $125 billion by 2000, according to Burner, Waldo, and McKusick, (1992). During this time, only 50% of prescriptions were paid out-of-pocket, compared to 70% in the late 1980's, illustrating a perpetual shift in how drug costs were borne by insurers and public payers. These trends demonstrate an interplay between legislative decisions and market dynamics, contributing to overall higher drug costs.
Prescription drug prices in the United States are among the highest in the world, with Americans paying significantly more for medications compared to patients in other developed countries. According to a report conducted by RAND, "prescription drug prices in the United States are significantly higher than in other nations, with prices in the United States averaging 2.78 times those seen in 33 other nations." Additionally, across all drugs, U.S. prices were 278 percent of other countries' prices (RAND). While many factors contribute to this increase, the lack of price regulation and patent protections exacerbate the overall process.
The persistent rise in pharmaceutical prices continues to place a significant financial burden on patients and healthcare systems, with drug price increases consistently outpacing inflation and contributing to escalating healthcare costs. "Over the period from January 2022 to January 2023, more than 4,200 drug products had price increases, of which 46 percent were larger than the rate of inflation. The average drug price increase over the course of the period was 15.2 percent, which translates to $590 per drug product" (Bosworth et. al.) Additionally, in 2023, the median price for new drugs was $300,000, an increase of 35% from the prior year (American Hospital Association). These staggering prices indicate that the cost of essential medications is rising rapidly, and in turn placing increased burdens on both patients and the healthcare system. The idea that 46% of drug prices surpassed the inflation rate and the average increase being $590 per drug demonstrates the large scale of the issue and how the financial burdens are unsustainable, particularly for individuals who are already struggling financially.
The continuous rise of high drug prices is causing healthcare systems to become unsustainable, negatively affecting patient outcomes. According to Bharath Krishnamurthy, Director of Health Analytics & Policy, "Higher drug prices and increasing drug shortages mean more costs for hospitals and health systems to bear, further stretching their limited resources and ultimately jeopardizing patients' access to needed care" (American Hospital Association).
In 2023, the issue of drug shortages worsened, with an average of 301 drugs in shortage per quarter, marking a 13% increase from the previous year. More than 99% of hospital and health system pharmacists reported experiencing these shortages, with 85% of respondents indicating that the shortages had a critically or moderately impactful effect on patient care (American Hospital Association). As Krishnamurthy highlights, these shortages, compounded by rising drug prices, are putting significant strain on hospitals' limited resources, which in turn threatens patients' access to necessary medications.
Furthermore, the continuous rise of high drug prices is also causing a decline in public health, as many Americans have reported not taking their medications as prescribed due to concerns over the cost. A CDC-reviewed study in JAMA Network Open showed that as prices of anti-infective drugs spiked, fewer patients received necessary treatments. For instance, the cost of a key hookworm treatment rose from $32.77 to $1,660 between 2010 and 2018, and the proportion of patients receiving appropriate medication dropped from 43% to 28% during the same period (Pharmaceutical-Technology). Additionally, according to a poll conducted by KFF research, nearly 30% of Americans say they haven't taken their medication as prescribed due to high drug prices. This data underscores the link between escalating drug costs and decreased access to essential medications, illustrating how hiking drug prices not only hinder individual health outcomes but also exacerbate public health crises. Not only are the number of Americans who cannot access essential medications increasing by the year, but it is projected that over the next decade, more than 1.1 million Medicare patients may die due to their inability to afford the medications prescribed to them, according to a study conducted by the West Health Policy Center.
The long-term effects of high pharmaceutical pricing have far-reaching consequences on public health systems, specifically diverting resources from preventative care, leading to increased chronic disease rates and higher long term healthcare costs. Higher drug prices are forcing healthcare systems to allocate more resources (including money, staff, time, and attention) toward covering the cost of medications instead of focusing on preventative care (Baker). As a result, preventative care is more often than not neglected, leading to more chronic diseases because these diseases are not detected or managed early on. This not only results in individuals being at risk for harmed health, but results in higher long-term healthcare costs. Moreover, the Commonwealth Fund reports that excessive spending on expensive treatments restricts the U.S.'s capacity to invest in preventive care, which is essential for managing chronic diseases and controlling long-term healthcare expenses. The report highlights a critical consequence of high healthcare spending and connects to the broader issue of chronic disease management and long-term costs.
Another critical long-term effect of high prescription drug prices is a larger health equity gap. High drug prices are unfairly affecting low-income individuals and marginalized communities. "People of color are disproportionately impacted by chronic illnesses and certain health conditions, such as diabetes, HIV/AIDs, hepatitis B and C, hypertension, cardiovascular diseases, obesity, and asthma. ...They are also more likely to be uninsured and are therefore disproportionately hit hardest by ongoing rises in the list prices for prescription drugs" (National Academy for State Health Policy). Additionally, Rising drug prices affect low-income individuals, putting them at a greater risk for developing severe health conditions that could have been avoidable. (Peter G. Foundation). The inability for these particular individuals to afford medications forces many within these communities to delay or forgo treatment, worsening health outcomes and entrenching social inequalities, creating a cycle of poor health and financial strain. Furthermore, untreated or poorly managed chronic conditions place a strain on the healthcare system through increased hospitalizations and emergency visits, which drives up the costs and puts a strain on the healthcare system as a whole. Addressing these disparities requires multiple systemic changes, to ensure that life-saving medications are accessible to all, regardless of socioeconomic status.
One way of addressing the immediate impacts of high prescription drug prices is through short-term, 'band-aid' solutions that can provide quick relief to patients and healthcare systems. One such solution is the enforcement of stricter exclusivity requirements, which grant drug companies a limited period to market and sell newly developed, approved drugs without facing generic competition. Ensuring that these exclusivity rights are awarded only when necessary-and not extended unnecessarily to block competition-can help prevent monopolistic practices that drive up prices (JAMA). Such measures would encourage greater market competition and allow generics or biosimilars to enter into the market sooner, ultimately leading to more affordable medication options for consumers.
Another quick fix is educating pharmacists, doctors, insurers and policymakers which in turn may help in making educated decisions regarding higher drug pricing. Educating those involved in patient care about affordable therapeutic alternatives, and empowering them with information to make informed decisions regarding treatment options (Mullins). This approach ensures that healthcare providers are aware of cost-alternatives, enabling them to prescribe or recommend treatments that are both effective and affordable. Moreover, informed policy makers and insurers can advocate for systemic changes, such as promoting the use of generic drugs or negotiating better pricing structures with pharmaceutical companies.
Although short-term solutions offer immediate relief, addressing the underlying causes of high prescription drug prices demands long-term strategies. These strategies must involve coordinated efforts from policymakers, the pharmaceutical industry, healthcare professionals, and communities.
One comprehensive strategy is the utilization of the EF approach as a long-term solution for higher drug prices. In hindsight,the EF, or efficiency frontier, compares a drug's quantified efficiency to its cost to determine if the drug is cost-effective when it's compared to other treatment options. The concept of the EF approach is nothing new to countries including Canada, France, Australia, and Germany, as it is standard practice to systematically evaluate the efficacy and safety of new medications and to negotiate prices based on a drug's added clinical benefits compared with existing therapeutic alternatives (Rand LZ). Further research conducted by Researchers Alexander C. Egilman et al, of the division of pharmacoepidemiology and pharmacoeconomics at Brigham and Women's Hospital in Boston showed that the US paid more than 3 times as much on psoriasis biologics than the selected peer countries. Egilman et al concluded that 'using an EF approach to negotiate prices could lead to substantial price reductions and better align prices with clinical benefits'. Overall, the application of the EF method shows other nations manage to provide similar or even better clinical outcomes at much better prices (Dermatology Times).
The EF method has not only been proven to be effective by its use in other countries, but it also presents an alternative to traditional cost-effectiveness analyses used to price drugs in the U.S. Cost-effectiveness analysis assesses the value of drugs based on their costs relative to health outcomes and often relies on quality-adjusted life years (QALYs), which can be influenced by subjective interpretations of health benefits, or in other words, subjected to political biases (Loomes). On the other hand, the EF method offers a more direct approach by focusing on measurable clinical data like the Psoriasis Area and Severity Index (PASI) scores​, making it easier to assess treatment efficacy across diverse populations. This could lead to a more equitable and consistent approach to ensuring access to essential medications.
Another long-term solution to addressing high prescription prices is implementing better price negotiation mechanisms. Within the U.S., the Inflation Reduction Act of 2022 provided Medicare the ability to negotiate prices for higher drug prices without biosimilar competition. However, other negotiation mechanisms used by countries like Germany have allowed the respective countries to control the pharmaceutical prices by a much higher margin. For example, Germany's system, which uses centralized drug assessment and price negotiation for new drugs coupled with reference pricing for non innovative drugs, has resulted in substantially lower drug prices..."(CommonWealth Fund).
Centralized drug assessment refers to the fact that the process of reviewing, managing, and approving the drugs distribution is handled by a single or central authority, such as the European Medicines Agency (EMA), rather than by each insurer individually. By empowering a central authority to assess and negotiate drug prices, countries like Germany have been able to achieve significant savings, ensuring that drugs are more affordable for both the healthcare system and patients. U.S. drug prices could be reduced if Medicare and private payers standardized the evaluation of a drug's clinical benefit, translated that benefit into a price, and resolved disagreements between negotiating parties (CommonWealth Fund). By adopting a more structured, centralized approach that would counter the often inconsistent pricing negotiations, the U.S. could have more predictable and transparent pricing, reducing the financial burden on patients and promoting long-term healthcare sustainability.
High pharmaceutical pricing remains a critical challenge in the U.S., impacting millions of patients across the country and straining the healthcare system. The effects of high drug prices remain to exacerbate the decline of public health through continuously placing burdens on an already strained healthcare, affecting affordability of medications, and creating an unfair larger health equity gap. Through a combination of immediate actions including educating healthcare workers, patients, and policymakers about affordable alternatives to highly marked prescription drugs and ensuring stricter exclusivity rights granted to pharmaceutical companies, and long-term strategies, including the implementation of the EF approach, and better price-negotiation mechanisms, the U.S. can help address the effects of high prescription drug prices and pave the way for a more equitable and sustainable healthcare system. By embracing a comprehensive and balanced strategy, the U.S. can mitigate the adverse effects of high prescription drug prices while ensuring equitable access to essential medications.
Prompt: For this paper, you are thinking about a problem that is negatively affecting society. What is keeping people up at night and how can we work to fix it?
As prescription drug prices soar, millions of Americans are forced to make choices that risk their health, finances, and even lives. This is the reality for many today, and without proper intervention, these rising costs-and the impact on public health-will likely continue. While many argue that high pharmaceutical prices are justified by research and manufacturing costs, it's essential to examine the detrimental effects on healthcare workers, marginalized communities, and everyday consumers nationwide. Moreover, the rising cost of prescription drugs in the U.S. limits healthcare access and worsens health outcomes, highlighting the need for stricter pricing regulations. This essay will explore the historical roots of pharmaceutical pricing, the extent and repercussions of its negative impacts, and proposals for both short-and long-term solutions to alleviate these negative effects.
Up until the 20th century, drug prices remained relatively stable, reflecting production and R&D costs. However, by 2014, generic prescription drug prices in the U.S. had increased by an average of 38%, according to the Generics and Biosimilars Initiative Journal. This sharp escalation begs the question: what caused prescription drug prices to skyrocket? A pivotal factor was the Hatch-Waxman Act of 1984, which extended patent protections for new drugs. While designed to incentivize innovation, this legislation also allowed companies to delay the entry of more affordable generic alternatives, significantly contributing to rising drug costs.
Additionally, prescription drug expenditures saw a significant jump, from $55 billion in 1990 to projections exceeding $125 billion by 2000, according to Burner, Waldo, and McKusick, (1992). During this time, only 50% of prescriptions were paid out-of-pocket, compared to 70% in the late 1980's, illustrating a perpetual shift in how drug costs were borne by insurers and public payers. These trends demonstrate an interplay between legislative decisions and market dynamics, contributing to overall higher drug costs.
Prescription drug prices in the United States are among the highest in the world, with Americans paying significantly more for medications compared to patients in other developed countries. According to a report conducted by RAND, "prescription drug prices in the United States are significantly higher than in other nations, with prices in the United States averaging 2.78 times those seen in 33 other nations." Additionally, across all drugs, U.S. prices were 278 percent of other countries' prices (RAND). While many factors contribute to this increase, the lack of price regulation and patent protections exacerbate the overall process.
The persistent rise in pharmaceutical prices continues to place a significant financial burden on patients and healthcare systems, with drug price increases consistently outpacing inflation and contributing to escalating healthcare costs. "Over the period from January 2022 to January 2023, more than 4,200 drug products had price increases, of which 46 percent were larger than the rate of inflation. The average drug price increase over the course of the period was 15.2 percent, which translates to $590 per drug product" (Bosworth et. al.) Additionally, in 2023, the median price for new drugs was $300,000, an increase of 35% from the prior year (American Hospital Association). These staggering prices indicate that the cost of essential medications is rising rapidly, and in turn placing increased burdens on both patients and the healthcare system. The idea that 46% of drug prices surpassed the inflation rate and the average increase being $590 per drug demonstrates the large scale of the issue and how the financial burdens are unsustainable, particularly for individuals who are already struggling financially.
The continuous rise of high drug prices is causing healthcare systems to become unsustainable, negatively affecting patient outcomes. According to Bharath Krishnamurthy, Director of Health Analytics & Policy, "Higher drug prices and increasing drug shortages mean more costs for hospitals and health systems to bear, further stretching their limited resources and ultimately jeopardizing patients' access to needed care" (American Hospital Association).
In 2023, the issue of drug shortages worsened, with an average of 301 drugs in shortage per quarter, marking a 13% increase from the previous year. More than 99% of hospital and health system pharmacists reported experiencing these shortages, with 85% of respondents indicating that the shortages had a critically or moderately impactful effect on patient care (American Hospital Association). As Krishnamurthy highlights, these shortages, compounded by rising drug prices, are putting significant strain on hospitals' limited resources, which in turn threatens patients' access to necessary medications.
Furthermore, the continuous rise of high drug prices is also causing a decline in public health, as many Americans have reported not taking their medications as prescribed due to concerns over the cost. A CDC-reviewed study in JAMA Network Open showed that as prices of anti-infective drugs spiked, fewer patients received necessary treatments. For instance, the cost of a key hookworm treatment rose from $32.77 to $1,660 between 2010 and 2018, and the proportion of patients receiving appropriate medication dropped from 43% to 28% during the same period (Pharmaceutical-Technology). Additionally, according to a poll conducted by KFF research, nearly 30% of Americans say they haven't taken their medication as prescribed due to high drug prices. This data underscores the link between escalating drug costs and decreased access to essential medications, illustrating how hiking drug prices not only hinder individual health outcomes but also exacerbate public health crises. Not only are the number of Americans who cannot access essential medications increasing by the year, but it is projected that over the next decade, more than 1.1 million Medicare patients may die due to their inability to afford the medications prescribed to them, according to a study conducted by the West Health Policy Center.
The long-term effects of high pharmaceutical pricing have far-reaching consequences on public health systems, specifically diverting resources from preventative care, leading to increased chronic disease rates and higher long term healthcare costs. Higher drug prices are forcing healthcare systems to allocate more resources (including money, staff, time, and attention) toward covering the cost of medications instead of focusing on preventative care (Baker). As a result, preventative care is more often than not neglected, leading to more chronic diseases because these diseases are not detected or managed early on. This not only results in individuals being at risk for harmed health, but results in higher long-term healthcare costs. Moreover, the Commonwealth Fund reports that excessive spending on expensive treatments restricts the U.S.'s capacity to invest in preventive care, which is essential for managing chronic diseases and controlling long-term healthcare expenses. The report highlights a critical consequence of high healthcare spending and connects to the broader issue of chronic disease management and long-term costs.
Another critical long-term effect of high prescription drug prices is a larger health equity gap. High drug prices are unfairly affecting low-income individuals and marginalized communities. "People of color are disproportionately impacted by chronic illnesses and certain health conditions, such as diabetes, HIV/AIDs, hepatitis B and C, hypertension, cardiovascular diseases, obesity, and asthma. ...They are also more likely to be uninsured and are therefore disproportionately hit hardest by ongoing rises in the list prices for prescription drugs" (National Academy for State Health Policy). Additionally, Rising drug prices affect low-income individuals, putting them at a greater risk for developing severe health conditions that could have been avoidable. (Peter G. Foundation). The inability for these particular individuals to afford medications forces many within these communities to delay or forgo treatment, worsening health outcomes and entrenching social inequalities, creating a cycle of poor health and financial strain. Furthermore, untreated or poorly managed chronic conditions place a strain on the healthcare system through increased hospitalizations and emergency visits, which drives up the costs and puts a strain on the healthcare system as a whole. Addressing these disparities requires multiple systemic changes, to ensure that life-saving medications are accessible to all, regardless of socioeconomic status.
One way of addressing the immediate impacts of high prescription drug prices is through short-term, 'band-aid' solutions that can provide quick relief to patients and healthcare systems. One such solution is the enforcement of stricter exclusivity requirements, which grant drug companies a limited period to market and sell newly developed, approved drugs without facing generic competition. Ensuring that these exclusivity rights are awarded only when necessary-and not extended unnecessarily to block competition-can help prevent monopolistic practices that drive up prices (JAMA). Such measures would encourage greater market competition and allow generics or biosimilars to enter into the market sooner, ultimately leading to more affordable medication options for consumers.
Another quick fix is educating pharmacists, doctors, insurers and policymakers which in turn may help in making educated decisions regarding higher drug pricing. Educating those involved in patient care about affordable therapeutic alternatives, and empowering them with information to make informed decisions regarding treatment options (Mullins). This approach ensures that healthcare providers are aware of cost-alternatives, enabling them to prescribe or recommend treatments that are both effective and affordable. Moreover, informed policy makers and insurers can advocate for systemic changes, such as promoting the use of generic drugs or negotiating better pricing structures with pharmaceutical companies.
Although short-term solutions offer immediate relief, addressing the underlying causes of high prescription drug prices demands long-term strategies. These strategies must involve coordinated efforts from policymakers, the pharmaceutical industry, healthcare professionals, and communities.
One comprehensive strategy is the utilization of the EF approach as a long-term solution for higher drug prices. In hindsight,the EF, or efficiency frontier, compares a drug's quantified efficiency to its cost to determine if the drug is cost-effective when it's compared to other treatment options. The concept of the EF approach is nothing new to countries including Canada, France, Australia, and Germany, as it is standard practice to systematically evaluate the efficacy and safety of new medications and to negotiate prices based on a drug's added clinical benefits compared with existing therapeutic alternatives (Rand LZ). Further research conducted by Researchers Alexander C. Egilman et al, of the division of pharmacoepidemiology and pharmacoeconomics at Brigham and Women's Hospital in Boston showed that the US paid more than 3 times as much on psoriasis biologics than the selected peer countries. Egilman et al concluded that 'using an EF approach to negotiate prices could lead to substantial price reductions and better align prices with clinical benefits'. Overall, the application of the EF method shows other nations manage to provide similar or even better clinical outcomes at much better prices (Dermatology Times).
The EF method has not only been proven to be effective by its use in other countries, but it also presents an alternative to traditional cost-effectiveness analyses used to price drugs in the U.S. Cost-effectiveness analysis assesses the value of drugs based on their costs relative to health outcomes and often relies on quality-adjusted life years (QALYs), which can be influenced by subjective interpretations of health benefits, or in other words, subjected to political biases (Loomes). On the other hand, the EF method offers a more direct approach by focusing on measurable clinical data like the Psoriasis Area and Severity Index (PASI) scores​, making it easier to assess treatment efficacy across diverse populations. This could lead to a more equitable and consistent approach to ensuring access to essential medications.
Another long-term solution to addressing high prescription prices is implementing better price negotiation mechanisms. Within the U.S., the Inflation Reduction Act of 2022 provided Medicare the ability to negotiate prices for higher drug prices without biosimilar competition. However, other negotiation mechanisms used by countries like Germany have allowed the respective countries to control the pharmaceutical prices by a much higher margin. For example, Germany's system, which uses centralized drug assessment and price negotiation for new drugs coupled with reference pricing for non innovative drugs, has resulted in substantially lower drug prices..."(CommonWealth Fund).
Centralized drug assessment refers to the fact that the process of reviewing, managing, and approving the drugs distribution is handled by a single or central authority, such as the European Medicines Agency (EMA), rather than by each insurer individually. By empowering a central authority to assess and negotiate drug prices, countries like Germany have been able to achieve significant savings, ensuring that drugs are more affordable for both the healthcare system and patients. U.S. drug prices could be reduced if Medicare and private payers standardized the evaluation of a drug's clinical benefit, translated that benefit into a price, and resolved disagreements between negotiating parties (CommonWealth Fund). By adopting a more structured, centralized approach that would counter the often inconsistent pricing negotiations, the U.S. could have more predictable and transparent pricing, reducing the financial burden on patients and promoting long-term healthcare sustainability.
High pharmaceutical pricing remains a critical challenge in the U.S., impacting millions of patients across the country and straining the healthcare system. The effects of high drug prices remain to exacerbate the decline of public health through continuously placing burdens on an already strained healthcare, affecting affordability of medications, and creating an unfair larger health equity gap. Through a combination of immediate actions including educating healthcare workers, patients, and policymakers about affordable alternatives to highly marked prescription drugs and ensuring stricter exclusivity rights granted to pharmaceutical companies, and long-term strategies, including the implementation of the EF approach, and better price-negotiation mechanisms, the U.S. can help address the effects of high prescription drug prices and pave the way for a more equitable and sustainable healthcare system. By embracing a comprehensive and balanced strategy, the U.S. can mitigate the adverse effects of high prescription drug prices while ensuring equitable access to essential medications.