Introduction
Over the last decades, society has found itself more concerned about well-being and health, partially because of innovations in science and new discoveries related to health. As a result, many countries have developed a problem of meeting the healthcare needs of their populations, while ensuring that medical assistance remains accessible for all. The rise of pharmaceutical empires, the growth of the elderly population, as well as the development of higher societal expectations in regards to healthcare attainment contributes to the issue. Deb and Curfman report that 25% of Americans experience financial difficulty paying for the necessary prescription drugs (826). Most alarmingly, “persons who reported having the greatest difficulty affording their prescription drugs were those who most needed them” (Deb and Curfman 826). Thus, it is apparent that the nation faces a crisis in healthcare attainability, which requires federal action.
As the public recognizes that the problem of drug accessibility can seemingly be resolved through governmental action and economic supervision, the issue is put on the agendas of various organizations. In the recent years, it has attracted substantial political attention and led to the public proclamations of promises to initiate change in an effort to contain pharmaceutical costs. However, as with any policies, the proposal of cost containment through profit caps on drugs faced the opposition, particularly from Big Pharma executives and those in power sponsored by them. The purpose of this paper is to demonstrate that the U.S. government must consider regulations to ensure economic control of pharmaceutical costs through profit caps on drugs. The focus of this particular work is critical medicine, including insulin, asthma treatments, and so on. The problem of rising pharmaceutical costs will be explored by examining diabetes and insulin costs in the United States. Cap on profits and price increases may be a radical solution, yet it is undeniably crucial in order to make healthcare affordable for people who require pharmaceuticals to survive.
Insulin Access: The Scope of the Problem
Diabetes is one of the most prevalent and deadly diseases in the United States and the world at large. Reports suggest that the total number of U.S. citizens suffering from diabetes is over 30 million, which amounts to healthcare costs of $327 billion annually (Cefalu et al. 1299). Although there is no cure yet, scientist have discovered numerous options for individuals with diabetes to achieve glycemic control, which, in turn, reduces the severity of the disease’s complications and symptoms. Despite the developments, many patients still struggle to manage their metabolic deformities as they simply cannot afford insulin. Thus, healthcare providers and millions of those suffering from diabetes face a challenge of paying for a drug, which is often a matter of life and death. When facing a choice between buying medications and purchasing some of the essentials, many people with diabetes do not have any other choice but to subject themselves to serious health consequences of not administering insulin.
In terms of pricing, there has been an accelerating trend of insulin costs skyrocketing. Between 2002 and 2013, the prices tripled and then increased by 17% from 2013 to 2016, according to Cefalu et al. (1301). Moreover, Cefalu et al. report that “between 2006 and 2013, average out-of-pocket costs per insulin user among Medicare Part D enrollees increased by 10% per year,” though the nation had an inflation rate of only 2.2% (1300). Therefore, although the issue of insulin affordability is not limited to the United States, data demonstrates that Americans suffering from diabetes find themselves in an exceptionally vulnerable position due to unjustifiable rises in pharmaceutical costs.
The Primary Causes of Excessive Pharmaceutical Costs
Monopoly
One of the leading reasons why Americans are charged excessively for medications is monopoly pricing. Emanuel notes that “through patent protection and FDA marketing exclusivity, the U.S. government grants pharmaceutical companies a monopoly on brand-name drugs” (para. 24). For instance, in the case of insulin affordability, it is important to note that the market for insulin is unfairly dominated by three massive international conglomerates (Cefalu et al. 1300). These corporations “represent 99% of the total insulin by value, 96% by total market volume, and 88% of global product registrations” (Cefalu et al. 1300). Thus, in these circumstances of no actual competition, companies have the ability to abuse the market and profit off those whose life often depends on certain drugs. For most of the incurable diseases, there is not even a question whether another costly medication will be needed but rather when it will be required.
Cancer, diabetes, and other serious medical conditions mostly rely on treatments and medications administered in a sequence, which eliminates the possibility of competition. The fact that NovoNordisk, Eli Lilly, and Sanofi-Adventis have virtually monopolized the insulin market only further contributes to their dominance and an overall absence of competitors (Rajkumar 71). In non-chronic diseases, the situation differs as competition usually gradually emerges as the patents given to monopolies start to expire. However, when it comes to serious incurable conditions, “by the time a drug runs out of patent life, it is already considered obsolete (planned obsolescence) and is no longer the standard of care” (Rajkumar 71). Hence, monopolies present a fresh, improved alternative to the market, which means that the drug is protected by patents yet again.
The danger of unregulated monopolies is apparent, which is why most governments try to protect their citizens and ensure that the prices for critical pharmaceuticals are affordable. Unfortunately, the United States seems to be years behind European and some of Asian nations. The federal government fails at initiating efficient cost control regulations. As a result, the country’s pharmaceutical industry is monopolized and unregulated, which subsequently leads to a lack of mechanisms in place to manage essential drug prices.
Lobbying
Another reason as to why many people cannot afford critical medication is lobbying. Scutti reported that Big Pharma spending on lobbying activities was over $200 million in 2018 although the industry faced considerable pressure to make drugs more affordable (para. 4). Therefore, it is clear that while the media and the public, as well as a group of politicians, have all raised their concern over the issue of drug affordability, their voices are repeatedly stifled by the lobbying efforts of pharmaceutical corporations.
The True Cost of Research and Development (R&D)
Those opposing solutions for ensuring medication affordability often emphasize the expenses needed for developing and manufacturing medications. On average, it takes approximately 12 years and $3 billion for a new drug to reach the market (Rajkumar 72). Thus, pharmaceutical corporations claim that any increases in price are justified by the immense cost of research, which is unique to the healthcare industry. However, based on the recent statistics, only 7 out of 25 companies that have the largest R&D spending are drug corporations (Emanuel para. 11). In fact, Amazon and an array of automobile manufacturers spend a lot more on research and development projects, according to Emanuel (para. 11). Furthermore, it is crucial to note that the R&D costs are usually inversely proportionate to the benefits of the newly released medication. In addition, pharmaceutical executives often choose to ignore that a significant part of R&D spending consists of public funding, which justifies governmental intervention in an effort to ensure attainability.
More importantly, the R&D cost estimations reported by Big Pharma are often inflated. In 2017, JAMA Internal Medicine published a study aimed at assessing the actual costs of cancer drug development. Researchers examined 10 FDA-approved medications released between 2006 and 2015. Prasad and Mailankody concluded that the median cost of developing a cancer drug was $648 million, and the post-release revenue was $1.658 billion (1569). Thus, it is evident that the high R&D spending pharmaceutical corporations claim to be the cause of price increases is exaggerated.
Solution: Cap on Profit and Price Increases
In order to manage the crisis in critical drug affordability, the U.S. government has to initiate regulations, which would put a cap on profit and price increases for pharmaceutical companies. It is apparent that such a proposal will face opposition from Big Pharma executives and politicians sponsored by them. These Congressmen might use the argument that profit caps are a form of price control, which offends the very notion of a free market. Some might suggest that the solution will cause more harm than benefits due to the pharmaceutical companies being forced to cut R&D costs. Although the likelihood of securing the 60 votes needed to pass the law is low, policy advocates, community groups, political fractions, and non-governmental organizations still have to try to battle the influence of Big Pharma lobbying. Ensuring that price increases are no more than inflation is certainly not a form of cost control. It is a simple mechanism of cost containment, which the officials already use widely in the procurement of military and civilian equipment.
Conclusion
In conclusion, it is evident that millions of Americans have difficulty affording medicine. More importantly, it is people suffering from incurable and chronic illnesses and often requiring critical drugs to survive who have to deal with rapidly increasing prices for medications. The primary reasons as to why pharmaceuticals are expensive and are often charged for excessively include monopoly and lobbying. The industry is essentially monopolized by a limited set of corporations, which acquire all the patents and set the prices most profitable to them since they do not have to face any real competition. Furthermore, any efforts to pass regulations to ensure cost containment are stifled as a result of Big Pharma lobbying. While certain pharmaceutical executives try to justify the prices by citing exceptionally high research and development costs, the data says otherwise. Not only are the R&D costs often immeasurably exaggerated, but a considerable part of this spending consists of the funds provided by taxpayers. An efficient solution to resolve the issue of critical drug affordability is a cap on profits and price increases for pharmaceutical companies.
Works Cited
Cefalu, William, et al. “Insulin Access and Affordability Working Group: Conclusions and Recommendations.” Diabetes Care, vol. 41, no. 6, 2018, pp. 1299-1311. doi:10.2337/dci18-0019
Deb, Chaarushena, and Gregory Curfman, G. “Relentless Prescription Drug Price Increases.” JAMA, vol. 323, no. 9, 2020, pp. 826-828. JAMA Network, doi:10.1001/jama.2020.0359
Emanuel, Ezekiel J. “Big Pharma’s Go-To Defense of Soaring Drug Prices Doesn’t Add Up.”The Atlantic, 2019.
Prasad, Vinay, and Sham Mailankody. “Research and Development Spending to Bring a Single Cancer Drug to Market and Revenues after Approval.” JAMA Internal Medicine, vol. 177, no. 11, 2017, pp. 1569-1575. JAMA Network, doi:10.1001/jamainternmed.2017.3601
Rajkumar, Vincent S. “The High Cost of Prescription Drugs: Causes and Solutions.” Blood Cancer Journal, vol. 10, 2020, pp. 71-75. Nature, doi:10.1038/s41408-020-0338-x
Scutti, Susan. “Big Pharma Spends Record Millions on Lobbying amid Pressure to Lower Drug Prices.”CNN, 2019.