Alarmingly, U.S. consumers spent over $457 billion on prescription drugs in 2015, as the cost of medicine continues to skyrocket, becoming one of our top consumer issues.
The issue isn’t anywhere near ceasing, either. The price of drugs rises each year, significantly faster than the rate of inflation. Researchers at Texas A&M have explored the reasons, and came up with the following:
“Brand name drugs, due to the high cost of their development, start out expensive and then tend to go up in price every year,” said Lixian Zhong, PhD, assistant professor of pharmaceutical sciences at the Texas A&M. “Combine this with other factors affecting the industry, and you have ballooning prices.”
The other factors mentioned, include a limited time to buy into the biggest profits. Once a drug goes on the market, its manufacturer has a patent giving it exclusive rights for a certain period of years. Once the patent expires, the drug becomes a “generic,” meaning other manufacturers can make versions of it, creating that thing called “fair competition,” which of course, will lower prices for the good of the consumer.
Another factor is the size of the market the drug sits in. Like most industries, the more specialized the product, in this case, the drug, the more expensive it will be.
“The most expensive drugs tend to treat orphan diseases, those with a patient population of less than 200,000,” Zhong said.
Drugs that treat complex, chronic conditions are also quite expensive. If a drug is effective, it is usually very expensive. Zhong says one particular drug that treats hepatitis C has a higher cure rate than competing drugs and fewer side effects. As a result, it also costs more.
Then there are new drugs that have been developed to treat cancer, rheumatoid arthritis, multiple sclerosis, and other diseases. These easily cost more than $10,000 a year, Zhong said.
“We cannot look at this problem without looking at the whole health care system, which is fragmented in the United States with many different payers,” Zhong said. “Countries with a single-payer system tend to have more negotiating power, so we pay more than other countries, often by quite a bit. On the other hand, those countries may limit the access to new medications due to economic concerns.”
There are ways around paying these astronomical prices, however.
Zhong mentions that consumers struggling with high prescription drug costs have a few options to make their meds more affordable. These options include:
- Seeking help from patient assistance programs. Many drug companies, for example, will provide medications at low or no cost in some cases.
- Looking for private insurance co-payment coupons to reduce or eliminate out of pocket costs.
- Asking your pharmacist about generic versions of name brand drugs
- Shopping around. You will be surprised how widely costs can vary, depending on the pharmacy and its location.
- Negotiating with the pharmacy. Sometimes they’ll cut you a break, but you have to ask.