Opposing Prescription Drugs Prices sample essay

American healthcare system is the most expensive one in the world. It accounts for about 17% of the nation’s Gross Domestic Product. Moreover, the growth of healthcare services is several times faster than growth of inflation or population in the country. And in this rapidly changing industry, where services double in price during several years, customers – the patients – experience the strongest misfortunes. Price for prescription drugs grows faster than other healthcare product and services, and thus prescription drugs account for almost the biggest part of healthcare spending in the United States. However, funding of prescription drugs research and development account for only 11% of the entire healthcare budgeting (HHS, 2005). Thus, the end retail prices and the costs of making and marketing these prescription drugs are incommensurable. So there is a need for government officials, authorities and secretaries to reconsider healthcare laws, and impose some regulations on pricing or other operations, in order to quell the skyrocketing prices for prescription drugs.

An important factor in American drug market is the research and development of prescription medications. Often times, healthcare companies claim that such high prices for their product are caused by intense research and development programs that allegedly cost the companies billions of dollars. And so to cover these tremendous expenses, the company has to raise the price to such a high point. In reality, however, such cases are rather rare. In majority of cases, companies ether do conduct research and develop a new product, but this research program do not cost the company so much money, or they do not conduct any research at all! So in around 7 of 10 cases with prescription drugs, producer companies either have spent little money for the development of that particular medication, or they have spent none. One important factor here is that these companies know that they can pretend to have conducted a really expensive development program, and so they opt for the unethical pricing policies. The second important factor about prescription drugs – or, in fact, or the entire healthcare system with all its services and products – is that it is completely inelastic, which means that an increase in price of the product does not influence the quantity demanded for that same product. To put it simple, people (patients in particular) would still have to go and buy drugs or have that treatment regardless of the price; they would pay their last savings because they have to survive, and healthcare services and products are means for survival. So, knowing that people would spend their last money and accept nearly any price, healthcare pharmaceutical companies dare to increase prices so high that regular customers, who are mostly seniors, have to choose between going to the grocery or to a drugstore. Unfortunately, this is sad reality of American healthcare system.

The first solution I would like to propose against the medications price increase is to abandon monopoly and encourage competition. Pharmacy giants like AstraZeneca develop new products and then they obtain patents, which give them exclusive rights to be the only ones to market this product. It is not so big of a problem when the medication is not popular, not effective, or is rejected. However, when the product proved to be effective, and marketing managers do their jobs well, the product becomes highly demanded, and the outcome is then obvious. Monopoly, high quantity demanded, nearly unlimited supply, and inelastic product, - all conditions indicate imminent very high price, which is exactly what happened in the U.S. pharmacy market recently. Thus, in order to avoid such unattractive market conditions (unattractive from a consumers’ point of view), the government should impose certain price regulations for holders of patent, they should set maximum limits for price for a certain medication marketed in monopolistic conditions. Or even more, the government should pass a law that amends American intellectual property rights, and prohibits pharmaceutical companies to become the only marketers of certain drugs.

Now, one can argue that such regulation would discourage pharmaceutical companies to develop new and highly effective drugs. However, one should also remember that first, companies would still be able to make huge profits on these drugs, and secondly, and most importantly, this market – this entire industry – is much more than simply wearing new shoes or playing new games, it is people’s health and lives, which is directly related to classical ethical and religious ideals. But pharmaceutical companies look like they are driven only by classical capitalist ideals, which is urging for more money. And it is the government’s and the president’s obligation to influence such a mercenary attitude, since they are defenders of people and their liberties.

Another solution to the growing prices in the healthcare sector is related to the previous one. I believe it is important for the government to pass such a law that obliges pharmaceuticals producers to provide details of their research of certain drugs, particularly those which are in strong demand. With such transparent market, pharmaceutical companies would not be able to provide false information and reasons for such high prices. Instead, the public would have access to the data. Such circumstances would restrict producers to increase prices and back such decisions by false research reports.

This solution has another advantage barring the one mentioned above. The government should pass a law that prohibits medication producer companies to price prescription drug too highly if the developers of these drugs were originally federal institutions. It is common knowledge (among those involved in healthcare services) that companies very frequently sell prescription drugs produced by them but developed by some other institution. Most of the times, producer companies sell prescription drugs developed by governmental organizations, such as Health Institutes, and still they sell these medications for huge prices. And so basically, these companies make huge money on something they had not even invented. When companies really spend millions of dollars on research, they can argue for the price. But in this case, companies simply use the knowledge of the government to make money (with unnaturally enormous profit margins) and put the populace – mostly seniors – in very unpleasant conditions. Therefore, the only way out of this mass fraud is to prohibit producers raise prices for pharmacies developed by the governmental institutions. Companies would still make good money, only the market would be more attractive for the consumers. Peter DeFazio, U.S. Representative, writes about this issue at his official web-site, “In 2000, I voted to reinstate a Reagan-era policy that requires drug companies to offer their products developed with taxpayer funds at a reasonable price” (House, 2006).

Finally, the last resolution I would like to propose concerns public sector. As the population of America ages, and seniors naturally require more medications than do other groups of society, government must take care of them. These older people, having worked for the country their entire life (hopefully), still have needs, which they cannot fulfill on their own. Prescription drugs are one of these needs seniors can barely afford. One of the solutions would be for the government to partially cover prescription drugs expenses for Medicare beneficiaries. Although other groups of consumers would still have to buy these same medications for regular (?!) price, Medicare beneficiaries are the major group of consumers, and they need the deductibles very much. This regulation would only help them, but if implemented, this would be a great achievement for the healthcare system of the United States.

Ultimately, American healthcare system requires immediate change. The prices for healthcare services are so high and continue to rise that currently consumers have to choose between food and medications. With the modest resolutions offered in this paper, American healthcare system can become a little better, and maybe these resolutions would remind producers and providers that they are not selling milk or hardware, but they help people and their well-being, and save lives.

Bibliography

1. DeFazio, P. (2006). Fighting for affordable prescription drugs. House of Representatives. Retrieved May 27, 2006 from http://www.house.gov/defazio/PrescripDrugs.shtml

2. Gladwell, M. (2004). High prices. New Yorker. Retrieved May 27, 2006 from http://www.newyorker.com/critics/atlarge/ ?041025crat_atlarge
Order custom essay now!