We’ve all thought it, “Why is the cost of prescription drugs so high?” You may think it’s the pharmacy jacking up the price, but in reality, it’s the drug manufacturer that sets the price tag.
The United States is the only country in the world that lets drug manufacturers and companies set their prices. To learn why the prices are so high and how to get around paying the full price, keep reading below.
Why Is the Cost of Prescription Drugs so High?
It’s not a secret that prescription drugs are more expensive in the United States when compared to other countries. This is due to the government-protected monopoly rights for drug manufacturers.
With the United States not regulating drug prices, it is left to the manufactures. In other countries, a government team is tasked with reviewing new drugs and setting the price, making sure it’s uniform.
As for the protected monopoly, this is in the drug manufactures patents. By letting these companies have 20-year patents they can keep the rights to the drug and not let generic formulations hit the market. This means the price won’t drop anytime soon.
The First Problem: Companies Set Their Own Prices
Countries that have national health programs work together with medical companies to set and negotiate prices. In the United States, there is no national health program and this leads to companies setting their own prices.
The Second Problem: Government Protected Monopolies
The United States has a specific patent system for drug manufactures. This allows drug companies to hold their patents for 20 years or more. The idea behind this was to help promote innovation, but it led to drug prices skyrocketing.
When you take a closer look at these 20-year patents, you will find that drug companies play the system to keep the patents and the drug under their roof.
When the 20-year expiration is about to come up, drug companies will make minor tweaks to their drugs. These tweaks can be anything from putting the formula together in a different way of adding or removing a minor ingredient.
This is concerning because once the patent is up other companies can begin to create generics. Generics are not made under the brand name and are usually cheaper than the original medication. Once the generic hits the market, the name brand drug’s price also drops to meet competition.
The Third Problem: The FDA Takes Their Time When Approving Generics
As stated above having generics on the market helps to give consumers a cheaper option and it also helps the name brand drug’s price to drop. This sounds easy but other than drug companies holding onto their patents in sketchy ways, the FDA takes its time with approving generic formulations.
Due to the backlog of applications the FDA has for generic medications, there is a 3 to 4-year waiting list. This is an issue because consumers shouldn’t have to wait for years to have access to affordable healthcare.
This isn’t the only problem generic drugs face when trying to make their way to the market. There are plenty of laws in the United States that can sometimes make it difficult for pharmacies to carry generic formulations.
The Forth Problem: Drug Manufacturers Aren’t Straightforward
When drug manufacturers and companies are confronted about high prices they will say that due to research and development costs, the prices must be high. When researchers looked into this they found out the numbers didn’t add up.
Usually, this research is funded by an organization which means the manufactures do not have to spare a penny from their pocket. Even if drug companies do put out money for research, it’s only 10 to 20 percent of their yearly revenue.
The manufactures decide on the price of medications due to the demand. If there is a high demand for the medication they will raise the price because consumers will buy it no matter what. If there is a low demand the price tends to be cheaper.
The Fifth Problem: Medicare
Years ago it was possible for Americans to try and negotiate drug prices. But in 2003 this all changed when the Republican-majority Congress created Medicare.
Those on Medicare, usually adults 65 and older, will get name-brand drugs for the full price. This is because Medicare is barred from negotiating prices with drug manufacturers and they must pay for any drug the FDA approves.
How Can You Find the Best Prices for Perscription Drugs?
Even though drugs are costly, you can get around the large price tag and find them for cheaper than the market price. One way to avoid the large price tag is to buy prescription drugs online. After ordering the prescription drugs will be mail ordered to your home in just a few days.
If you don’t want to buy online or don’t have regular access to the internet, you can use a pharmacy checker to see what pharmacies have the cheapest prices in your area. A pharmacy checker will help you to save money and to see what pharmacies have higher prices and which ones have more affordable ones.
The More You Know
We have discussed the high cost of prescription drugs in the United States. We even noted how the United States differs from other countries when deciding on drug prices.
You now know the top reasons as to why prescription drugs are more expensive in the United States. We also gave you the tool to find drugs for cheaper to save some money.
For more money-saving tips be sure to check out the rest of our website.