Prescription Drug Price Increases and Policy Reform

“I can’t afford my medications anymore.” 

“They’re choosing profit over people.” 

“If I can’t afford my medication, I’ll just have to go without it…” 

These are the common sentiments heard from many patients in contemporary healthcare. Yet it seems like these concerns are only background noise for pharmaceutical companies, as the increase in prescription drug prices over the last few years has been rampant and constant, impacting hundreds of thousands of victims all over the world. 

Prescription drugs are medications that must be administered by medical professionals and can be heavily regulated as a consequence of their potent side effects and, sometimes, the way they’re specified for certain medical conditions. They can be roughly organized into three predominant categories: chronic disease medications, acute care medications, and speciality drugs. Chronic disease medications are designed to treat long-term health conditions such as diabetes, hypertension, asthma, etc., and are of imperative import because they oftentimes substantially improve the quality of life for patients. While chronic conditions like diabetes can never be completely cured, their symptoms can be reduced or controlled with proper medication at the correct dosages and schedules. However, increased drug prices often lead patients to ration their medication or skip doses due to cost, which can exacerbate their health problems and result in inadequate treatment. The average price of insulin was found by a 2020 study to have nearly doubled between 2012 and 2016 and risen by nearly 300% in 2020 as opposed to 2000. When whittled down to the core these rapid increases are all effectuated as a product of pharmaceutical companies’ business practices–a concept with a diversity of viewpoints surrounding it. 

The most direct explanation that pharmaceutical companies could offer as to why the prices of prescription drugs have been rocketing is…monopoly. A monopoly is a market situation where a sole entity has all the authority in terms of the distribution of a certain good or service, and in a pharmaceutical context corporations make many medicines under government-approved monopolies–patents–over drugs to which they own intellectual property rights. Monopolies are also inevitable when trying to bypass the many hoops and steps of developing new drugs: there are no alternatives to it, but at the same time they essentially give companies the power to set their price as high as they want for a particular drug because they don’t have any pressure or competition coming from the market. Pharmaceutical companies also sometimes argue that the higher prices are simply parallel to the expensive costs of developing new drugs and issuing the clinical trials required to approve their safety. The process of developing novel drugs is lengthy, involving preclinical research in animals, clinical trials in humans, and several steps for FDA approval. Not only that, but the process of getting medication from manufacturer to end-user is also very complicated, beginning with production and transportation to distribution centers by pharmaceutical companies and ending with the administration of the medicine by healthcare providers or pharmacies. 

At the end of the day the reason the prescription drug prices are rocketing boil down to a combination of factors–business practices, lengthy drug approval processes, patents, etc. But none of them make up for the hundreds of thousands of patients suffering in silence without proper dosages of their medications. 

However in recent years governments and advocacy groups on a global scale have been urging for policy reforms with the most notable act that’s been established being the Inflation Reduction Act. The act was enacted in 2022 by the United States Congress and requires drug companies to pay rebates–a financial incentive that a buyer receives after purchasing a product or service–to Medicare when prices increase at a speed ahead of the rate of inflation for certain medications. This law has relieved the millions of people with access to Medicare by lowering their drug costs and expanding their benefits. It also acts as a price cap: price caps are imposed by the government and fundamentally give companies a maximum price that can be issued for any specific good or service. The Inflation Reduction Act introduces a provision that penalizes pharmaceutical companies if their drug price increases exceed inflation; it also has many different price caps established adjacent to it. For example, a maximum of $35 per month was set for Medicare beneficiaries and in certain states like Colorado, Maine, and California the insulin price was capped at between $50 to $100 monthly. Another example of reforms currently in the process of being established are patent law revisions–they are exactly what they sound like: updates or changes made to the original legal framework of some patent law. Patent revisions include a long process involving various reviews, consultations, approvals, etc., but act to hopefully take steps toward removing some control from pharmaceutical companies. A revision called the Biologics Price Competition and Innovation Act was put into place in 2010. It simplified the approval process for FDA-licensed biological products and laid down the groundwork criteria that a “biosimilar” product must meet if a company wants to apply for licensure of it. Law revisions that are currently in the process of being proposed are the End Drug Monopolies Act and Lower Drugs Costs Now Act. These proposals would work to prevent the minute modifications that pharmaceutical companies make on their drugs to maximize their profit from qualifying for new patents. They would also address “patent thickets”, in which multiple patents are filed on a single drug to delay generic competition. 

Other actions currently being taken toward policy reform of prescription drug price increases are ideas like drug price transparency, the importation of cheaper drugs, and incentivizing generic and biosimilar development. Incentivizing generic and biosimilar development means forming policies or systems that push for wider distribution of drugs that are marketed not under brand names, tied to patents and monopolies, but under chemical names. This could serve to lower healthcare costs by increasing competition and thereby improving the general access to essential medication for a big audience of patients. 

Works Cited

Centers for Medicare & Medicaid Services. “Inflation Reduction Act and Medicare.” Www.cms.gov, 12 Sept. 2023, www.cms.gov/inflation-reduction-act-and-medicare.

Diener, Matthew. “Drug Prices and Shortages Jeopardize Patient Access to Quality Hospital Care | AHA News.” Www.aha.org, 22 May 2024, www.aha.org/news/blog/2024-05-22-drug-prices-and-shortages-jeopardize-patient-access-quality-hospital-care.

Patel, Kavita, and Kevin Schulman. “Policy Options to Reduce Prescription Drug Costs.” Department of MedicineNews, 2024, medicine.stanford.edu/news/current-news/standard-news/policy-options-white-paper.html.

Rapfogel, Nicole. “Drug Companies Continue to Hike Prices above Inflation.” Center for American Progress, 1 Nov. 2023, www.americanprogress.org/article/drug-companies-continue-to-hike-prices-above-inflation/.