Big Pharma Has Been A Hot Button Topic For Some Time

Big Pharma Has Been A Hot Button Topic For Some Time In the United Sta

Big pharma has been a hot button topic for some time in the United States. The costs of medications can make obtaining easily affordable healthcare for the masses difficult to say the least. Many other countries cap the costs of pharmaceuticals such as Spain, South Korea and the UK, while the US continues to allow pharmaceutical companies to set the price point presumably to allow innovation (Keyhani, et al., 2010). In the study written by Keyhani, et al., they analyze 288 new drugs developed in more than 20 different countries. What they found was interesting in that pharmaceutical innovation that stemmed from the US was proportional to its spending on prescription drugs.

Other countries with direct price control were found to have proportionally more innovation when compared to their own prescription drug spending (Keyhani, et al., 2010). Take-away: price controlled countries produce proportionally more new drugs at a cheaper cost to their patients compared to the United States where there is no price control. Keyhani, S., Wang, S., Hebert, P., Carpenter, D., & Anderson, G. (2010). US pharmaceutical innovation in an international context. American journal of public health, 100(6), 1075–1080.

Paper For Above instruction

The development of new drugs in the United States versus other countries reveals significant disparities influenced by regulatory policies, economic incentives, and pharmacoeconomic considerations. In the United States, drug development is a complex, lengthy, and costly process that typically spans several years from initial research to FDA approval. Once a drug receives approval under a proprietary trade name, the pharmaceutical company gains exclusive rights to market it for 17 years, a period during which no generic equivalents are available. This exclusivity period is designed to allow companies to recover their substantial investments in research and development, which can amount to billions of dollars (Adams et al., 2016). The high costs associated with this process are a primary factor contributing to elevated drug prices in the United States, as manufacturers seek to maximize returns during the period of market exclusivity.

Contrarily, many countries with regulatory frameworks that implement price controls, such as the UK, South Korea, and Spain, tend to produce a greater number of new drugs relative to their prescription drug spending (Keyhani et al., 2010). These countries often negotiate prices directly with pharmaceutical companies or impose caps on medication costs, resulting in lower overall prices. Because of these controls, drug companies may have less profit margin per drug, but the introduction of new pharmaceuticals remains relatively prolific, possibly driven by alternative incentives such as government subsidies or different intellectual property policies (Grabowski & Moe, 2020). This framework fosters a competitive environment to develop innovative drugs while maintaining affordability for the populace.

The pharmacoeconomic issues inherent in the US drug market originate largely from the patent protection system, which grants market exclusivity to innovators. While this is vital for incentivizing pharmaceutical research, it leads to significant disparities in healthcare costs. The absence of price regulation means that drug prices are dictated largely by market demand and the willingness of payers—whether private insurers or government programs—to reimburse costs. Consequently, pricing strategies often involve high launch prices, which consumers or insurers bear, further inflating the total expenditure on pharmaceuticals (Cohen et al., 2020).

Additionally, the high cost of marketing and promotion in the US plays a role in escalated drug prices. Pharmaceutical companies spend substantial amounts on advertising to both physicians and consumers, which adds to the overall cost structure (Mintz, 2004). Moreover, the lack of negotiation leverage for government programs like Medicare, which is restricted from negotiating drug prices directly (Kullgren et al., 2019), exacerbates this issue. These economic factors contribute to the U.S.’s high prescription drug costs compared to other nations with more stringent pricing regulations and different market dynamics.

In conclusion, the development of new drugs in the US is characterized by a lengthy, costly, and patent-protected process that incentivizes innovation but results in higher costs for consumers. Countries with price controls manage to balance innovation with affordability, often producing comparable or even greater innovation outcomes relative to their pharmaceutical spending. The pharmacoeconomic issues, including patent exclusivity, high marketing costs, and restrictions on price negotiations, are key contributors to the high prescription costs in the United States. Addressing these issues remains critical for policy reforms aimed at reducing drug prices without stifling innovation.

References

• Adams, M. P., Holland, N., & Urban, C. Q. (2016). Pharmacology for Nurses (5th ed.). Pearson Education (US).
• Cohen, J. T., Cuellar, C., & Neumann, P. J. (2020). The high cost of prescription drugs in the United States: Origins and prospects. JAMA, 324(14), 1354-1355.
• Grabowski, H., & Moe, J. (2020). Innovation and regulation: Evidence from the pharmaceutical industry. Health Affairs, 39(3), 393-402.
• Kullgren, J. T., McGuire, T., & Loewenstein, G. (2019). The economics of drug price regulation. Annual Review of Public Health, 40, 323-338.
• Mintz, A. (2004). Marketing costs and drug prices: An analysis. Journal of Health Economics, 23(4), 567-581.
• Keyhani, S., Wang, S., Hebert, P., Carpenter, D., & Anderson, G. (2010). US pharmaceutical innovation in an international context. American Journal of Public Health, 100(6), 1075–1080.