Transition in Pharmaceutical Industry Essay

Introduction

As demand for quality but inexpensive health services increases across the globe, people are opting to use generic drugs. In the United States, high cost for the patent drugs is leading to patients using generic drugs. The American government uses varied regulations and rewards to encourage the development and sale of generic drugs. For instance, the first generic drug to enter into the market is awarded six-month market exceptionality (Grabowski, & Vernon, 2002). The development of generic drugs offers a potential opportunity to pharmaceutical companies. Unlike in Canada where there are mechanisms for controlling drug prices, the United States does not have price control mechanisms. Consequently, drugs are expensive in the United States compared to Canada. As the aging population in the United States continues swelling up, demand for healthcare services like nursing continues going up. Hence, nursing will be one of the future economically rewarding careers in the country.

As demand for medical services increases across the world, more people are avoiding pursuing medical professions like doctors. Poor remuneration systems and lack of stimulating courses are some of the factors that are leading to a decline in interest in pursuing this profession. To encourage people, to pursue the profession, the government ought to come up with an attractive remuneration system and innovative courses. In the United States, there are numerous health policies that aim at ensuring that healthcare providers offer quality and affordable services. These policies are leading to transformation of healthcare organizations (Dussault, & Dubois, 2003). In future, healthcare organizations are likely to embark on pay-for-performance policy where employees will be reimbursed based on their performance.

Effects of regulations on the U.S pharmaceutical industry

Decision-makers in numerous countries have spurred a significant transition in the pharmaceutical industry. The creation of new policies that promote generic drugs is leading to the American pharmaceutical industry investing heavily in generic drugs, and abandoning research and development of branded drugs. Payers in the United States have held on to generic medicines by coming up with numerous policies that encourage their development and use. They promote the development and availability of generic drugs through regulatory policies such as the Bolar provisions. The provisions give room for generic producers to complete their regulatory procedures before running out of the inventor’s molecule patent. Moreover, regulations in the United States promote the development of generic drugs over branded drugs through establishing reward policies. For instance, any generic drug that first enters the market after the expiry of a patent drug is awarded six-month market inimitability (Grabowski, & Vernon, 2002).

Currently, generic drug manufacturers do not go through a rigorous procedure to introduce their drugs, in the market. In 1984, the American government came up with Hatch-Waxman Act through its Food and Drug Administration department (FDA). The Act aimed at cutting down on the duration taken before a new drug is introduced to the market. Under the Act, manufacturers of generic drugs are expected to make sure that their drugs match the original ones in terms of ingredients and work just as the patented drugs they are to replace. Nevertheless, the manufacturers are not supposed to provide clinical and pre-clinical information to proof safety and efficiency. Hence, the reduction in generic drugs approval process is contributing to the current transition in the American pharmaceutical industry (Kanavos, 2007).

Pharmaceutical companies will have an excellent opportunity in development and sale of generic drugs. As countries, continue relaxing their regulatory policies, thus accommodating development and sales of generic drugs, there is a likelihood that demand for generic drugs will increase in the near future. Besides, the governments and consumers are looking for alternative methods of offering quality but inexpensive health care. Generic drugs are proving to be the best alternative. Hence, pharmaceutical companies that will focus on development of generic drugs will stand a better chance to enhance their profitability, survival, and growth.

Drug pricing practices in the U.S and Canada

The United States practices a free market system. Hence, product manufactures enjoy the prerogative of setting prices of their products without having to give the rationale for their pricing strategies. Normally, manufacturers only change their prices when they learn that consumers are unwilling to buy their products at the established prices. In line with federal laws, “pharmaceutical rights give drug producers at least twenty years to entirely provide, manufacture, and sell their products” (Wagner, & McCarthy, 2004, p.81). Consequently, the United States does not have a limit for the maximum price at which a company is supposed to sell its drugs. This contributes to the drug prices going up every year. A study conducted on twenty-six pharmaceutical companies in the United States revealed that drug prices increased by triple the inflation rate (Wagner, & McCarthy, 2004).

Normally, drug manufacturing companies price their drugs based on the costs associated with research and development. Pharmaceutical Research and manufacturers of America (“phRMA”) claims that it is extremely expensive, in terms of time and money to, come up with an effective and safe drug. Hence, this cost is passed on to consumers (Graham, 2003).

Unlike the United States, Canada has an established body that is responsible for regulating drug prices in the country. Patented Medicines Price Review Boarded (“PMPRB”) is mandated with establishing the most effective prices for drugs. The board uses private producer drug pricing data to come up with what it perceives to be a reasonable indiscriminate price capable of yielding a profit and reasonable return on a particular pharmaceutical product (Graham, 2003). This board leads to most of the drugs selling at significantly lower prices in Canada than in the United States. PMPRB has a guideline that requires all drugs to be sold at prices that do not exceed the consumer price index. Furthermore, the guideline sets limit for prices of novel branded drugs. Prices of novel drugs, particularly those that offer temperate or no enhancement may not go beyond the highest cost of the present drugs that cure similar ailments (Graham, 2003). The price of drugs offering a significant improvement may be higher as long as it does not exceed that set by the other seven developed countries.

In spite of Canada having a board that is responsible for regulating prices of both generic and patented drugs, the drug prices have continued swelling up just as in the United States. One of the factors that have contributed to an increase in drug prices, for the two countries, is the increase in research and development in the pharmaceutical industry. As companies continue inventing new drugs, they pass on the cost of developing these drugs to consumers thus increasing the price of their new drugs (Graham, 2003). Most of the Canadian pharmacies purchase their drugs from the American companies. In spite of Canadian government establishing checks and measures to control drug prices, whenever Canadian companies buy drugs at higher prices from the American countries, they sell them at higher prices to their consumers (Graham, 2003).

The main disparity in drug prices between Canada and the United States is caused by the absence of a regulatory body in the United States that sets the limit for drug prices. Consequently, American manufacturers enjoy the freedom of setting prices at their desired level. Failure to regulate the cost of drug prices in the United States has given way to most the Americans opting to purchase drugs from foreign companies. Besides, America has come up with re-importation strategy as a way of ensuring that the Americans purchase drugs at affordable prices. The main reason why consumers opt to purchase American drugs, from Canadian pharmacies, is that such drugs are sold at cheaper prices relative to those sold locally.

Career trends in health care related industries

Demand for health care services continues increasing with change in economic and demographic pattern. Professionals and researchers have noted that, with time, some of careers in health care industry will be in high demand. According to a study conducted in 2010, in the United States, the number of nurses in the country is likely to go up because of the high demand for this service. The country is expected to register an all time high demand for registered nurses as time goes by. Apart from an increase in demand for registered nurses, demand for speech-language pathologists is expected to increase with time. Between the year 2000 and 2010, this number increased by 40 percent, and is expected to increase with time. The number of the aging population in the United States is growing with time. Hence, demand for medical attention from this population is increasing. With time, pharmacy technicians will be on high demand in the country.

The current trend in demographic pattern shows that demand for nursing services in the United States is going to increase with time. Nursing job will be one of the most economically rewarding careers in the near future. The aftermaths of September 11 attacks and economic hardships, encountered between 2001 and 2010, led to a significant twist in career demand in the United States. Demand for careers that facilitate in improving the life of the Americans went higher relative to demand for careers that focus on producing goods. Careers related to healthcare are in great demand and will continue being in demand. By the end of this year, the number of people aged between 55 and 64 years will be more than 43 percent. Hence, demand for healthcare services will be higher in the near future while the number of healthcare providers will decrease. This implies that the nursing career will be in high demand than ever in the United States.

Decline in interest in pursuing medical profession

Interest in studying for the doctor’s profession continues declining in the United States. This decline comes at a time when the service is in high demand, in the country. This trend is not exceptional in the United States. Other countries across the globe also experience the same. There are claims that this has been caused by intense pressure placed medical practitioners, particularly doctors. Nevertheless, this is not the main reason. Other numerous factors are making people recoil from studying for this profession. One of the frustrations emanate from the remuneration system. There is a significant gap between the salary paid to specialist doctors and those doctors that offer general services. This great difference between the generalists and specialists makes most of the intellectuals avoid taking medicine as their career.

Another factor that is leading to a decline in a number of people opting for doctor’s profession is the presence of non-stimulating and hard to understand courses in medical schools. Some of the offered medical courses are hard to understand making most of the scholars shy away from pursuing the profession. For instance, most of the scholars fear pursing Nephrology since they claim that it is difficult to understand (Kohan, 2011). Another factor that contributes to individuals lacking interest to pursue the medical profession is the disheartening inpatient experience encountered by doctors. At times, a doctor may devote him or herself to offering quality care to the patients, but still loose most of them to the diseases. This makes most of the doctors feel guilty since they feel not to be competent enough.

The United States, just like other countries lacks proper compensation policies that would encourage individuals to study in the medical profession. Normally, this profession drains one’s energy and calls for a lot of commitment. Consequently, it requires having superior recompense policies to encourage people to take it. Nevertheless, such policies are not in place leading to people opting for other careers that do not demand a lot of commitment and are not expensive to pursue.

Remedies to the problem

Numerous measures can be taken to encourage people to pursue the medical profession in the United States and across the globe. For instance, the United States government ought to come up with reimbursement policies that promote residency schooling even in the non-hospital environment. Such policies would lead to most of the people that feel that the profession is not well-compensated change their mind and opt to pursue it. Moreover, there is a need for the establishment of a medical service model that promotes dependence on a harmonized group of professionals. This would eliminate chances of categorizing doctors as either specialized or generalized. This categorization lowers the status of generalized doctors thus discouraging many from pursuing the profession.

There is a need to the establishment of innovative teaching tools in medical schools. For instance, the Nephrology course need to have innovative teaching tools to make the course fascinating and easy to understand. In addition, introduction of innovative teaching materials in medical schools would foster creativity within the students thus leading to new treatment strategies that would boost the confidence of those pursuing the career (Kohan, 2011).

Roles of health care policies

In every industry, there are policies and guidelines that govern operations within the industry to ensure a mutual benefit between the industry and people that rely in the industry. Failure to have these policies may lead to one of the parties being exploited. In the healthcare industry, there are policies that govern how the industry operates. The main role of health policies is to ensure the safety of patients (Dussault, & Dubois, 2003). Health policies outline varied requirements that the industry ought to meet when manufacturing, prescribing, and selling its drugs. These requirements ensures that companies in this industry manufacture quality drugs and prescribe them accordingly thus averting chances of patients suffering from consuming the drugs. A health company that violates established health policies is liable to prosecution. Failure to have health policies may lead to enormous malpractices in the health industry. For instance, there is high demand for prescribed drugs across the globe (Dussault, & Dubois, 2003). Lack of proper health policies may lead to individuals offering on-the-shelf drugs thus adversely affecting patients. Established health policies help in making sure that only the authorized health practitioners and facilities dispense drugs.

Apart from ensuring the safety of the patients, health policies also facilitate in ensuring that citizens get quality health care. Moreover, the policies facilitate in cutting down on health inequalities within a country. Countries like England have health policies that help in ensuring that its people have access to quality healthcare (Dussault, & Dubois, 2003). The county has policies that aim at ensuring that every child has access to quality life after birth. Besides, it has policies that encourage the government to create and nurture sustainable and healthy community. There are health policies that hold health institutions accountable for the services they offer. Such institutions can be prosecuted for offering substandard services.

Health care sector established health policies to identify, manage, and prevent the emergence of specific health problems. Private institutions and federal agencies issue reports and guidelines enlightening the Americans on methods of addressing particular health challenges, such as obesity (Towey, & Fleming, 2004). These policies help the public maintain and lead a health life rather than depending on healthcare providers. The United States has healthcare policies that seek to enhance research and development in small companies. The government has imposed policies that offer a tax credit to small pharmaceutical companies, as a way of encouraging them to invest heavily in developing new categories of drugs.

Impacts of health policies on organizations

Increase in demand for quality health and establishment of stern health policies, which hold institutions accountable for their actions, are likely to have significant impacts on healthcare institutions. To ensure that organizations improve on quality healthcare services, there is a high likelihood that organizations will embark on pay-for-performance strategies. Organizational boards will start holding their managers and doctors responsible for their services. Besides, they will pressure them to ensure that they attain the desired quality in their areas of specialization. Moreover, there will be significant changes in recruitment procedures employed by healthcare institutions. To hire experienced staffs that will help organizations achieve the desired quality, healthcare institutions are likely to embark on a recruitment procedure that hires medical leaders from the different disciplines to promote bottom-up change (Larson, 2007).

Healthcare reform policies will affect organizations with respect to research and development strategies. As a way of encouraging research and development in small pharmaceutical companies thus promoting a healthy living, the American government has established policies that offer a tax credit to young companies. These are companies made up of less than 250 employees (Dussault, & Dubois, 2003). As government, continue supporting the upcoming companies, these companies are likely to invest in developing new products in the future. Besides, establishment of policies that encourage the sale of generic drugs will lead to numerous mergers and acquisitions in the future. Bigger pharmaceutical companies will merge with small ones and use them as subsidiaries for developing and improving on new generic drugs. Companies will increasingly outsource most of their support services to pave room for a more responsive environment capable of addressing the demand for quality but inexpensive drugs.

Conclusion

Novel regulations in the pharmaceutical industry, in the United States, are promoting the introduction of generic drugs. There are policies that allow manufacturers of generic drugs to introduce their drugs to the market prior to expiry period of the patented drugs. Besides, the manufactures are given rewards to encourage them introduce their drugs in the market. In spite of the United States being a leading manufacturer of patented and generic drugs, the cost of drugs in the country is higher relative to other countries. There are no price control measures in the United States leading to manufacturers offering their drugs at higher prices. On the other hand, Canada has a board responsible for setting drug prices. Consequently, most of the Americans opt to purchase their drugs from Canada. Today, the United States opts to use re-importation strategy to deal with drug prices, in the country. The country exports drugs to Canada and then import them back.

Changes in demographic pattern, in the United States, are leading to changes in career trend in the health care industry. As the aging population increases, demand for nursing services continues swelling up. Despite the demand for medical service going high with time, there is a decline in interest in pursuing medical professions such as doctor. Some of the factors leading to this decline include poor remuneration system, absence of stimulating courses, and lack of proper compensation policies. The American government ought to come up with viable remuneration policies and innovative teaching materials to encourage people to pursue the profession. The government of the United States is working hard to ensure that health care providers offer quality services and guarantee the safety of their clients. The government has established numerous health policies to achieve this. Introduction of these policies is likely to cause changes in recruitment and payment methods, in health care industries. In future, health care companies are likely to use pay-for-performance mechanism and hold their employees accountable for their works.

References

Dussault, G., & Dubois, C. (2003). Human resources for health policies: a critical component in health policies. Human Resources for Health, 1 (1), 18-34.

Grabowski, H., & Vernon, J. (2002). Brand loyalty and price competition in pharmaceuticals after the 1984 Drug Act. Journal of Law and Economics, 35 (2), 331-350.

Graham, J. R. (2003). Prescription drug prices in Canada and the United States-Part 4. Canada: Public Policy Institute.

Kanavos, P. (2007). Do generics offer significant savings to the UK National Health Service? Current Medical Research and Opinion, 23 (1), 105-16.

Kohan, D. E. (2011). Training the next generation of nephrologists. Clinical Journal of American Society of Nephrology, 6, 2564–2566.

Larson, L. (2007). Physician Autonomy vs. accountability: making quality standards and medical style mesh. Trustee, 60, 14-16.

Towey, K. J., & Fleming, M. (2004). Policy and Resource Guide: Adolescent Obesity, Physical Activity, and Nutrition. Chicago: American Medical Association National Council on Adolescent Health.

Wagner, J. L., & McCarthy, E. (2004). International differences in drug prices. Annual Review of Public Health, 25, 475–95.