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BIG PHARMA CHARGES UP TO 10X MORE FOR DRUGS IN US THAN IN OTHER COUNTRIES

Alex Pietrowski

Nov. 4, 2015

There is one important factor which makes the United States (US) a very lucrative market for Big Pharma – inflated drug prices. Big pharma generates about $250 billion+ per year in sales of prescription drugs in the United States alone. This isn’t just because of the sheer amount of people in the US population who take prescription medications for some ailment or condition. What makes the US one of the most lucrative markets for Big Pharma is that drug companies are charging up to 10 times as much for pharmaceuticals when compared to other developed countries.

Below is a chart offering data from the 2013 Comparative Price Report published by the International Federation of Health Plans.

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2013 data from the International Federation of Health Plans; Source

The examples in the chart above are common drugs that are used for illnesses that affect millions. For example, depression and anxiety affect about 18% of US adults; 1.5 million suffer from rheumatoid arthritis; and gastrointestinal diseases such as acid reflux affect nearly 60 percent of the US adult population in any given year.

To add a little more depth into how these prices can affect a person, consider that the average monthly income in the US is around $4000.

So why is drug price gouging such a serious problem across the US pharmaceutical industry? US laws, the current state of medical insurance, Medicare, and drug research are all parts of the problem, leaving the little to no oversight in how much drug makers can charge for their drugs.

“As opposed to other countries, American laws actually prevent the government from restraining drug prices. Federal law even prevents the single largest drug buyer – Medicare – from negotiating drug prices. This is a perfect example of how Big Pharma has successfully manipulated laws in such a way that they can operate completely unrestrained in the US, under the flimsy argument that high prices and profits are required in order to fund costly research to develop potentially groundbreaking drugs to treat our ever-proliferating ills.” Source

Should US taxpayers and patients carry the responsibility of subsidizing the R&D efforts of drugs that are developed in the US, but then sold around the world?

The scheme becomes even more elaborate when you consider that pharmaceutical companies give rebates to hospitals to create incentive to dispense certain drugs, and as a result the hospital can then make greater profits. Medicare bases its payments on an “average base price” of a drug, even though different hospitals buy the drugs at varying prices and benefit from rebate discounts. Hospitals can make as much as 50 percent or more profit on what Medicare pays for the drug!

As a result, Medicare and, therefore, all US taxpayers contribute handsomely to profits of hospitals and drug companies. Recently investor Martin Shkreli made headlines when he purchased the rights to an HIV drug and raised the price of it by hundreds of percent, showing that investors are using this market to prey on both taxpayers and people who are in need of treatment.

Is there a reasonable justification for putting this financial burden on the US public? Share your thoughts.

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