Case Study 1 Writing Assignment
Mikayla Hyde
The United States is the largest individual consumer in the world pharmaceutical market
by a significant margin. America is the wealthiest country in the world and its citizens are
notorious for wanting instant gratification, which, in this case, means wanting access to
innovative drugs as soon as possible, despite the cost. For these reasons, Americans are less price
sensitive, so drug manufacturers can charge significantly higher prices in America, thereby
maximizing their profit.
Proponents of prescription drug price regulation favor two possible solutions to the issue
of rapidly rising U.S. drug prices. The first option is that the U.S. government requires the retail
price of drugs sold in America to be the same as the prices of the same drugs sold in other
countries. The second idea is to allow pharmacies to import FDA-approved U.S. prescription
drugs from countries where the drugs are sold for much less. Both of these plans have significant
drawbacks.
With the first plan, a drug manufacturer would have to decide on a single price to charge
- one that would maximize their profit. Due to the substantial profits earned in the U.S., the new
price would likely be much closer to the price that is currently charged in America. Prices would
increase substantially in foreign countries, decreasing the people's access to drugs even more and
harming them greatly. Regarding the second plan, if we were to import drugs from another
country, that country would need to purchase more for its own citizens, and U.S. producers
would likely refuse to sell more to them at lower prices, just for the drugs to be resold in the U.S
Perhaps even more importantly than the consequences presented by both plans, if the U.S. were
to regulate its drug prices like other countries do, R&D investment and incentive would decrease
sharply, greatly restricting development of innovative drugs, potentially hurting us more than
decreased prices helped.
With all of that said, the only conclusion that I can come to is that neither plan is a viable
option. However, I do think there are a few, less drastic measures that can be taken. If companies
can be incentivized to produce generic copies of drugs that have only one supplier, but for which
the patent has expired, this would increase market competition and drive prices down.
Additionally, the government could implement an annual cap on the price paid by patients with
rare conditions or chronic diseases that require many expensive prescription drugs. At the end of
the day, these less invasive measures could have significant effects on driving down prescription
drug prices, without the harmful effects of the popular regulation plans. The benefits of lower
drug prices for Americans are not worth the costs that it would impose on citizens of other
nations -- it's unethical and should never even be considered as an option.
481 Words