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9Obianuju Obi

Prof. Turgeon

UWRT 1101-008

25 February 2017

Pharmaceuticals and the Impact of Prices on Patient Health

Mark, a cancer patient of Walgreens pharmacy receives notification that his

Lenvima prescription is ready. Your insurance saved you $13,867 the leaflet reads. In

the absence of prescription coverage, Mark would have been dead. This is not a one-

time medication, but rather a monthly medication; he is comparatively buying a new car

every 30 days. Doctors and insurance companies have long been popular targets of

populist wrath, including pharmaceutical companies themselves. (Bandow, 1) Despite

the presence of governmental aid in the cost, there still remains a need for increased

financial contribution through the national Medicaid and Medicare agendas.

Among the services provided by the market economy, pharmaceuticals hold the

most contentious position. The lengthy time to create a drug and the monumental prices

allow pharmaceutical companies to indulge in monopolistic powers in many sectors of

drugs. Despite the fact that they are constructed by private companies, they distribute a

good for the public that is essential, due to the prevention of epidemics and overall

public health of the populace. The price of medication is unreasonable. There are

instances where hospitals, who typically provide high-priced and high-maintenance

drugs, are now turning patients to get the drugs on their own financial terms. This can
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even include chemotherapy medications. The alarming rate in which hospitals are now

holding admitted patients responsible to obtain prescriptions themselves, outside the

hospital setting, demonstrates the severity to save funds, due to high prices. America is

the origin to the worlds substantial pharma, where consumers pay the highest prices to

keep them down for other nations. This refers subsidization of drugs and the that fact

that United States consumers end up covering the high cost of pharma research for

various countries. Even with insurance coverage, many medications are very costly,

causing patients to decline the use of a drug that can potentially keep them alive.

Governmental intervention has had a major impact through its recent programs

such as Medicaid and Medicare, however there are some flaws in the financial

distribution of the programs. In 2003, Congress passed the Medicare Prescription Drug,

Improvement, and Modernization Act, better known as Medicare Part D, in an effort to

ease the burden of skyrocketing prescription prices for citizens 65 and older. (Hastert, 1)

While much of the discussion has focused on the impact on Medicare and Medicaid, the

search for the source of high prescription drug prices has possible benefits for all

patients. Unfortunately, the vast majority of research into this topic focuses only on the

manufacturers of prescription drugs. Congress and federal agencies that investigate the

source of the skyrocketing prices, have not proposed solutions to address the problem.

Some may argue that government intervention in health is the primary source

available. To exemplify the extent of the government's participation in Americas health

system, one may consider the statistic according to MedScape of 2002, that local, state

and federal governments spent a combined $718 billion which half the total expenditure.
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(Openshaw, 1) However, this fact is slightly outdated compared to 2017 values. To

account for this new change, the factors considered are inflation, economic failure

resulting in higher pricing and government program such as the Affordable Care Act of

2008 that altered prices for medications and general health care both positively and

negatively. The negative effect of this particular act affects hospitals as well; they must

meet new benchmarks for items such as readmissions or face penalties. Doctors as

well are engrossed in a hasty consolidation and are forced to adapt to updated payment

models. This is out of the ordinary of traditional practices. Ultimately, there is need for a

more effective method of coverage for the average people, ethically and financially. With

huge monopolistic companies such as Mylan with the recent EpiPen epidemic, the issue

was able to be combatted with competition with the new generic form which in turn

forced prices of the brand to decrease. This project to create another form was actually

denied by the company Sanofi, in the efforts to create Auvi-Q, a more affordable form

and avid competitor of the Epi-Pen. (Kass,1) This act of denying other competition is

step towards the leveling the prices of medications.

One must examine the relationship between the wholesale and the actual retail

price in the pharmacies. It can be discovered whether or not there is a different

possibility of yielding profit with lower pricing. This requires research in price per-pill

evaluation, mark per-pill by type of pharmacy, percentage markup per-pill by type of

pharmacy and drug, etc. According to price data, the price arrangement in the pharma

industry is not hierarchical with the manufacturers at the top, wholesalers, and retailers

at the bottom. Instead the industry also has third party payers who exist outside the
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domain of this hierarchy. These third party organizations include Health Maintenance

Organizations, also known as (HMOs) and Pharmacy Benefit Managers (PBMs). The

significance of this correlates with the government help programs. It very well effects to

people who do not even utilize the program, focusing primarily on middle class

Americans. (Gryta, 2) Even in the presence of regular health insurance, many policies

do not cover the full amount of the prescriptions, leaving a co-pay for the patient as well

as a high deductible requirement.

Although the federal government has evaluated the prices of the medications,

some state governments have intervened as well. The most common method of the

state intervention is price pooling which is also known as bulk buying programs.

(Pearson, 1) The idea is that the state purchases prescription drugs in large quantities

from wholesalers and manufacturers. This focuses much on the Medicaid programs in

the state. There are approximately five multi-state bulk purchasing groups. Despite the

noticeable impact this strategy has on patients, the small five groups can be increased

to cover more area of people in need of coverage. The momentum of this program just

needs to continue, and America will see an impact.

Fortunately, third party discount card companies have had a major role in the

assistance of financial coverage for insured or partly insured patients. One major

discount card company is GoodRX, often claiming to save patients 75% on

prescriptions. This promise is not always completely valid however. Like many other

main insurance companies, these third party cards have preferred medications and
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preferred pharmacies. This is the cause in fluctuating prices across various

medications and pharmacies. In order to maintain the health of pharmacy consumers,

the aid of these companies must be maintained and expanded to the known public. This

is only an indirect step forward. To initiate a larger impact, the issue lies in

congressional action. Changes are created through the democratic nature of the system

that can issue change through petitions, laws, vetoes, etc. This ties into the argument of

natural human rights; the government has a duty to recognize and act on human crisis.

At many times, it is out of the patients control to not be able to afford crucial

medications. As citizens, and as human beings, we have rights to health and should not

be hindered by the costliness of drugs, whether it be maintenance or acute medications.

Factors that help in the problem of prescription prices and coverage are the

major public backlashes that increase awareness for people to take democratic action.

Awareness holds a major impact that holds the power to sway corrupt industry. Although

this did not occur for many other drugs, companies such as Mylan were able to reverse

the extremely high price for an essential drug. Not only does this benefit uninsured

patients, but it has a direct effect on the governmental aid programs willingness to pay

for them. As stated earlier, the manufacturers prices contribute to the formulary of the

Medicaid and Medicare programs. The solution deals heavily with community citizen

voice that has the power to sway major monopolistic companies.

Works Cited

Bandow, Doug. "The Pharmaceutical Industry." FEE. Foundation for Economic

Education, 01 Feb. 1994. Web. 28 Mar. 2017.

Gryta, Thomas. "What Is a 'Pharmacy Benefit Manager?'" The Wall Street Journal. Dow

Jones & Company, 21 July 2011. Web. 28 Mar. 2017.

Hastert, J. "Medicare Prescription Drug, Improvement, and Modernization Act of 2003."

[Link]. N.p., 08 Dec. 2003. Web. 28 Mar. 2017.

Kass, Dani. "Ex-Sanofi EpiPen Alternative Auvi-Q Coming Back In 2017 - Law360."

Law360 - The Newswire for Business Lawyers. N.p., n.d. Web. 28 Mar. 2017.

National Institutes of Health. U.S. Department of Health and Human Services, n.d. Web.

28 Mar. 2017.

"The New Drugs War." The Economist. The Economist Newspaper, 04 Jan. 2014. Web.

28 Mar. 2017.

Openshaw, Matthew S. "Medscape Log In." Medscape Log In. N.p., n.d. Web. 28 Mar.

2017.

Pearson, Susan L. A Need for Government Inervention? Thesis. 2011. N.p.: n.p., n.d.

Print.