Joy Igbinedion,communications in Public Settings, Thursdays 6PM
TO:Jason Chaffetz,Chairman,Committee on Oversight and Government Reform
FROM: Joy Igbinedion
DATE: September 6, 2016
SUBJECT: Government Regulations of Prescriptions Drugs Costs in America.
To assist you in the consideration of bills advocating for the increased government regulations of prescription drugs prices, I have written this memo, to argument, your insight on the problems, harms, and causes associated with the high cost of prescription medications. It is a known fact, that prescription medication has been a contributing factor to the nation’s expensive healthcare cost.However, in recent years, the rates, and level at which prescription drugs costs is escalatingin America have become alarming.The skyrocketing cost of prescription medication is now becoming the dominant problems of the overall healthcare cost, carrying negative impacts on health outcomes. Although, many factors accounts for the prevailing costs of prescription drugs, however, thelack of government regulations ofprescription drugs prices,frequently stands out as the mostprevalent factors, in the calls for putting polices in place to control drug costs.
Problem:The costs of Prescription drugs in American have become so exorbitant that prescription medications are, now almost beyond the reach of mostconsumers. In recent periods, prices of brand names and generic medications doubled, tripled, or in some cases soared by 1000% or more, as indicated by (Jaret, 2015), analysis. Currently, the news media are full of drug costs spikes, including that of EpiPen, a prescription medication use in the treatment of life threatening allergic reactions rising from $57 in 2014 to $600 in 2016. Thetime intervals and the rates of these price surges associated withthese prescription drugs cost, are so alarming,consumers and providersare usually surprised and unprepared, because they are left with no time search for alternatives. As a result, these extortionate prices, set by the drug manufacturers have been categorized by American public, including theDemocratic Presidential Candidate, Hillary Clinton, as“price gouging and shameful” (Stephenson, 2015).The escalating cost of prescription drugshave continued to rise without any hope of it stopping in sight. According to (Kesselheim,Avorn andSarpatwari, 2016), the price of prescription medication rose 20% between 2013 and 2015. To illuminate, the widespread effects of increasing prescriptions drug cost on the total healthcare cost, their report indicated that,Americans, spent $858 per person, compared to 19 other industrialized countries, where $400 were spent on prescription drugs costs. This was attributed tostricter government regulated drug costs, across those 19 countries. In 2015, the prescription medication Daraprimthat have no alternative,which is use to treat rear forms of parasitic infections rose by over 500%from $13.50 in 2014 to $750.0 in 2015. Similarly, another medication, Avastin use for the treatment of cancer increased from $4,000 to $9, 000, while Doxycycline an antibiotic went from $20 a bottle to $1,849 in 2014.As the society struggles to digest these surmounting increases in costs,EpiPen, a patented auto-injector of epinephrine bolus dose,increased over 500% from $57 in 2015 to $600.00 in the past months. However, according to (Belk, 2016),reports of such price hikes in American’s news mediaappearsto have no hope of ceasing in the near future.Since, there are absolutely no regulations to restrict or control how much drugs manufacturers can charge for medications in the USA,compared to other industries countries where medications cost prices are strictly under government regulations.
Harms effect of increasing cost of prescription drugs: As, of skyrocketing drug prices, prescription drugs costs in America seem to be on the route to wiping out any hope of improving health outcome, the major mandate of thePatients Protection and Affordable health Care Act (ACA). The hope of the ACA is to improve Health outcome, through health promotion and improvement in chronic health conditions through preventative care. However, due to excessive pricehikings, prescription medications are skyrocketing beyond the reach of most consumers and as such, its intended uses. Likewise, healthcare providers are finding it difficult to achieve any meaningful gains in the quest for effective preventative care or improving health outcomes. According to(Kesselheim,Avorn andSarpatwari, 2016), report’s in the Journal of American Medical Association(JAMA), prescribers, health insurers, healthcare payers, policy makers, and the economy are burdened by the escalating costs of prescription drugs in America. The harmful effectof skyrocketing drugs cost is a societal wide issue, considering that prescriptions drug users are the units of the society. Take for example, patients with toxoplasmosis and Aids, who will suffer organs failure and blindness in the absence of Daraprim, a medication that have no alternative for the treatment of these conditions.The exponential rise in its costsby over 500% from $13.50 to $750 holds serious threats to the patients, who depend on this medication to stay alive.Similarly, patients suffering from life threatening allergic reactions, with no quick access to reaching a medical facility, who could benefit with the EPIPen auto- injector, stand no chance at life.This, due to the exorbitant cost of this life saving medications’ cost increase from $57 in 2015 to $600.00 in the past months. Patients, whose lives depend on EpiPen willsuffer death or permanent brain injury, if they are lucky to be alive. All these, may result because there are no regulations in places to control absurd price hikes of prescription costs. Anotherproblem associated with the escalating costs of prescription drugs is increasing copayments. Consumers are faced with increased medications copayments, as insurers are known to pass on excessive cost to consumers. According to Islam (2015), as the average cost of cancer treatment rose from$10,000 to $100,000 as with other treatments drugs, insurers started limiting, denying coverages or pushing larger portions of the cost as copayments to patients. This will eventually leadsto sicker populations, which carries detrimental effects for the overall healthcare costs, as well as the total populations’ health outcome.
The causes of skyrocketing cost of prescription medications:The pharmaceutical industry enjoys a non-regulated business environment relating to their product costs in America, which are the opposites in other industrialized nations where effective government cost regulations prevent arbitrary prescription drug cost increases (Kesselheim,Avorn andSarpatwari, 2016). Clearly, drug research and development,which drugs manufactures attributes as the causes of their products’ skyrocketing costs, comes with high price tags. However, according to (Islam, 2015), several assessment of prevailing drug cost indicates that the real cost drivers is the value the drug manufactures places on their products. This leads them to set prices at levels based on what theythink the market will bear. The reports indicated that drug manufacturers tend to set prices capitalizing on the inelasticity of most prescription drugs. The lack of government regulations and the absences of restrictions on the pharmaceutical industry in America has been the most reason,accounted for the skyrocketing cost of prescriptions medications (Islam, 2015). The big difference in negotiations rules, leads to more costs spending per person in the USA as compared to other industrialized nations. For example, one-month’s supply of Lipitor, a cholesterol lowering medication that cost $100 in the USA, cost $6 in New Zealand. The Medicare non-negotiation policy is another identified source of the skyrocketing cost of prescriptions drugs. According to (Islam, 2015), Medicare, the largest payer of prescription drug is forbidden from negotiating with drug makers due to government policies. This is contrary to the practices in other developed nations, where the major insures are responsible for negotiating drug cost. As part of his argument (Islam, 2015), stated that’s, the pharmaceutical companies showed their unhappiness towards a recent proposal by the Obama admiration, proposing Medicare should be allowed to negotiate drug prices. Additional reasons, identified as the contributing causes of skyrocketing drug cost are the monopolistic tendency associated with the laws of patenting. In their study, Kesselheim,Avorn andSarpatwari, stated, “The most important factor that allows manufacturers to set high drug prices is market exclusivity, protected by monopoly rights awarded upon Food and Drug Administration approval and by patents”(Kesselheim,Avorn andSarpatwari, 2016). The recent increase of EpiPen is a classic example of the monopolistic tendency thatexists with patenting and branding rights. Furthermore, the pharmaceuticals industry controls the prices of drugs through, such strategies, as, mergers and acquisitions, which limit competition. The manufacturers of Daraprim exploited this factor in skyrocketing the cost of this medication.
In conclusion, as indicated by (Islam, 2015), and most other healthcare experts and concerned citizens, I believe putting in place, government policies, and regulations, will help reduce the current skyrocketing drug costs.As indicated by these reports, this will also have the added benefits of reducing the overall healthcare cost and improve health outcome. This is due to the fact, that, consumers, providers, and insurers will save cost for other health issues. Although, the financial success of the drug makers is equally important in ensuring the continued innovation of disease treatments, however, in the continued absence of effective government regulations of prescription drugs costs in the United States, prescription manufacturers will continue to skyrocket drug costs.
Thank you for your time and consideration. I am open to making suggestions and helping to finding better ways to reducing the skyrocketing prescription medication costs in America, should you find this contribution useful.
Definitions of Key Terms
Patenting: The exclusive rights granted to manufacturer for their inventions, which span over a period of time.
Prescription drugs: A pharmaceutical medication that requires prescriptions before they can be filled.
Parasitic infection: Parasites are microorganisms that live off of other organisms, or hosts, to survive. A person becomes infected when they break the defense of the host person.
EPIPen auto- injector: A device filled with epinephern, which is capable of injecting a bolus dose of the medication in emergency involving allergic reactions.
Antibiotics: medications use in the treatments of bacterial infections. Price Inelasticity: An economic term used to describe the situation in which the quantity demanded or supplied of a good or service is unaffected when the price of that good or service changes.
References
Belk, D. (2016, June). Prices Spike for Some Generic Drugs:The skyrocketing Cost of Brand Named Prescription Drugs. The Huffington Post, W. Retrieved from
Islam, I. (2015, August). Rising Cost Of Drugs: Where Do We Go From Here?. HealthAffairs Blog, P. Retrieved from //healthaffairs.org/blog/2015/08/31/rising-cost-of-drugs-where-do-we-go-from-here/
Jaret, P. (2015, July/August). Prices Spike for Some Generic Drugs: Costs for brand-name drugs also rising. AARP Bulletin, H. Retrieved from
Kesselheim, A., Avorn, J., & Sarpatwari, A. (2008). The High Cost of Prescription Drugs in the United StatesOrigins and Prospects for Reform. Journal of the American Medical Association, 316(8), 858-871. Retrieved from
Stephenson, E. (2015, September). Democrat Clinton to unveil plan to fight drug 'price gouging'. Reuters, p. C1. Retrieved from