Political Science 1101
Nathan Combes
14 March 2018
Why are American Drug Prices Increasing?
Almost everybody knows that America's drug prices are increasing at a steady rate and
they are furious about it, but do they know why it's happening? It seems that recently there have
been stories about insurance companies putting obstacles between consumers and less risky
medications with lower prices. Between 2006 and 2015, pharmaceutical and biotechnology sales
revenue increased from $534 billion to $775 billion. "Drug companies raise prices far exceeding
inflation because they can," said Scott Knoer, chief pharmacy officer at the Cleveland Clinic. "In
the absence of regulation and without consumer awareness--since consumers don't generally see
the price due to insurance--the sky is the limit." So who is to blame for all this?
The U.S. has pretty much allowed drug companies to just set their own prices. The U.S.
Government Accountability Office (GAO) decided to find out who is behind the fastest growing
expenses in healthcare. They found that much of the rise in drug spending was fueled by the use
of expensive brand-name drugs, although some pharmaceutical companies have increased
generic drug prices as well. Though, the pharmaceutical industry's main defense of rising
medicine prices are the high costs associated with drug development. According to the Journal of
Health Economics, drug companies spend over 10 years and $2.6 billion to bring a drug to the
market. The Food Drug Administration (FDA) has been trying to approve more low-cost generic.
drugs in order to lower pharmaceutical prices. The FDA also claims they are trying to fix the
problem of branded drug manufacturers blocking generic drug companies. "People are concerned
about drug prices; more are being forced to make trade-offs between paying for their drugs and
for food or rent," says AARP's Purvis. We need to stop letting the large drug competitors take
charge get in the way of lower drug costs