Premium Prescriptions: Why the Doctor's Orders are so Expensive
- MedSpeak
- Aug 6
- 3 min read
Prescription drugs have become commonplace in the medical world. Antibiotics are prescribed for infections and after surgeries, while many drugs are used to counteract common diseases and reduce pain for patients with chronic diseases. They’re an easy way to treat diseases in an easy-to-consume form. But why do they cost so much?
The System
Drug prices in the US have been proved to be double those of other richer countries such as France and Great Britain. Why do the same drugs cost more in the US?
It mainly comes down to the healthcare system. Most European countries employ a universal healthcare system where anyone can receive basic care for little to no cost. European healthcare is paid for by taxpayers, funding care for those who are unable to pay. On the other hand, US healthcare is based on insurance and markets. Healthcare is strictly a business in the US, and patients need to either pay the hospital out-of-pocket for the care they receive or use private insurance to cover most costs for them. With these fundamental differences in how healthcare is perceived, pharmaceutical companies change their pricing according to where drugs are being sold.
The US is one of the only countries in the world that allows drug marketing straight to patients through means such as billboards or advertisements on television. The drug freedom offered in the US makes them more of a product than a right for people to have. There is no central body governing whether or not a drug is overpriced in the US, unlike in Europe, where the governments usually set drug prices.
Since pharmaceutical companies are the ones setting prices in the US, prices will always tend to be higher. And companies expect this: that’s why they market drugs in the US. Higher prices can’t be lowered by anybody but the company, so prices continue to be higher than Europe as long as supply and demand exist.
What else?
A capitalistic system reinforces the idea that companies need to maximize profits off drugs. Doctors and hospitals can be funded with incentives to prescribe their drugs, since prescription drugs can only be prescribed by the doctor. Ads encourage patients to request the drug from doctors, and incentives encourage doctors to promote them. These factors aid in drug sales, letting companies drive up the price and profit.
But it isn’t so cut-and-dry: there are middlemen between the companies and doctors. In the US, according to studies done by the Pharmaceutical Research and Manufacturers of America (PhRMA), manufacturers only take home half the profits of the sales of the drug. Keep in mind, PhRMA is a lobbying group for big pharmaceutical companies, which means their studies may be biased. But middlemen such as pharmaceutical benefit managers do exist and they do eat off profits, which means companies need to drive up the price to compensate.
Conclusion
The drug market is complex and ever-changing, especially in the US. Throughout the world, universal healthcare has set the drug prices and limited the already extensive profits of pharmaceutical companies. The US’s private insurance system of healthcare has created a toxic business model for pharma companies to feed off patients’ needs for critical and life-saving drugs. As long as there is no central body for drug price regulation in the US, price gouging for prescription drugs will still exist.
Comments