This post was prompted by a short news item noting that even many patients with “good” commercial health insurance saw their out-of-pocket costs for medication rise 15% last year.
As readers of Prescription for Bankruptcy know, the U.S. is a dramatic outlier when it comes to the cost of pharmaceutical products. A RAND study published online January 28 showed that in 2018, prices for drugs in the U.S. were 256% higher than the average in 32 OECD comparison countries – 2 ½ times as expensive! This was driven by the cost of brand-name drugs, as our generic prices were slightly lower.
Why are drug prices in this country so high? The major reason is that the pharmaceutical manufacturers can get away with it. Medicare is prohibited by law to negotiate prices and the “middlemen,” the prescription benefit managers, keep most of any price reductions they get.
Brand name manufacturers have developed many strategies to maintain their monopolies, often skirting the law to prevent generic competition. They may make minor tweaks to a product to get an extension of their monopoly or may simply pay generic manufacturers to not make their products.
Big pharma, which usually cites the high cost of R&D to justify their profits, spend more on marketing than on R&D, usually by a wide margin. They bribe doctors to prescribe their products – not overtly, of course, but by sending in attractive young “detail reps” bringing lunch and samples. There is solid data showing this is money well-spent, because even though most doctors may feel they are not influenced by this type of marketing, studies have repeatedly shown they are. Considerable sums are also spent on direct-to-consumer ads to drum up demand for new expensive products.
Do high prices matter? Yes, as they not only hurt middle income earners badly in the pocket, they also lead to patients simply stopping their medications. Several recent studies have shown high rates of people skipping or stopping important medications and suffering serious health consequences as a result.
What can be done? Major change must begin at a national level. The most obvious step is to allow Medicare to negotiate for lower drug prices. Both the VA system and the Department of Defense do this, so there is clearly no philosophical objection. Since the older we get, the more prescriptions we tend to use, this step would make a huge difference in national health spending.
We can piggyback on the effective drug price strategies our peer countries all use by setting a ceiling on allowable drug prices based on the average price in Western European countries and Canada.
In the meantime, and my cynical side says that the deep pockets of the pharmaceutical industry are likely to thwart or delay any major changes, here are some ideas you can use now.
Always ask your doctor if the medication you are taking is available generically, or if a very similar drug is. For new ultra-expensive biologic drugs, ask about “biosimilars,” very close matches that work as well. If you are using tablets rather than capsules, it is often much less expensive to get a larger strength tablet and cut it. SHOP: the difference in price between different pharmacies can be dramatic.
Finally, if you or a family member are taking many drugs, ask your primary doctor to review them and see which you may be able to stop. This can be good for your health as well as your pocketbook.
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