Big Pharma’s Greed and Rising Drug Costs

The pharmaceutical industry has almost too much power over our ability to regulate our own health. Medications have become a necessary commodity for a large portion of the population. But many of these medications have turned out to be unaffordable. The drug manufacturers, whether brand name or generic, are increasingly charging excessive amounts of money for their drugs. Even generic drugs, once a refuge for those weary of high medication prices, are getting more expensive as consolidation in the generic drug industry thins out competitors.

Drugs are not within the reach of many Americans

According to a poll by the Kaiser Foundation, 73% of Americans think that drug prices are unaffordable. Generic drugs are the only form of medication that people can afford. Name brand medications get seven years of protection from generic manufacturers. But it’s almost never exactly seven years as these patent lengths can be extended through various means. For example, drug companies can extend their patents and maintain their monopolies by reinventing the same drugs. A drug like Ritalin can extend its patent from seven to fourteen years by inventing an extended release version of the same drug. When you add in the delays by the FDA, these drug patents can last for an even longer amount of time.

The drug companies use these patents to give them price protection from generics. These patents give them a length of time where patients have to pay whatever price is demanded by the drug manufacturers for their medications. The length of patent protection for name brand drugs starts out at seven years. The psych medications Prozac, Paxil and Zoloft were all extended at least once.

Big pharma likes to research hot markets, and they like to market to consumers

Pharmaceutical companies put their resources towards developing unknown markets to give them a first mover advantage. Their ultimate goal is to develop a medication that no other manufacturer even has on their radar. A good example is Eli Lily and their creation of the social anxiety disorder, which is addressed by their Paxil medication.

The pharmaceutical companies always say that it costs them so much money to develop a drug. They always use this as justification for charging high prices. But the money they receive from consumers is only partly used to fund research and development. Much of it is instead funneled toward their goal of marketing these drugs. These drugs don’t sell themselves. Whether it’s putting commercials on TV or taking doctors out for meals, marketing plays a big role in consumer adoption of a drug.

Generic manufacturers are being bribed

Generics are important because most people can’t afford to pay thousands of dollars per pill. The lack of a generic alternative can sometimes be the difference between life and death. You have an unfortunate situation where people are dying from hepatitis C because there isn’t a generic alternative available. Meanwhile, the government sits idly by and doesn’t do anything to help.

Some drug companies will even pay to delay the generic version from ever hitting the market. A company like Pfizer can pay bribe money to generic manufacturers to keep them from manufacturing generic medications. There’s no good explanation for this other than big pharma’s greed. Since there is no generic, the customer pays more or does without. The consumer ends up being the victim of big pharma’s greed for more profits.

The troubling thing is that nobody gets prosecuted. Democrats and Republicans both are unwilling to do anything about it. There are definitely signs of anti-competitive market behavior going on, and it will be up to the Federal Trade Commission to do something about it.

Americans can better afford these drugs once they go generic. Patients can save hundreds of dollars on every prescription by using generics. Drugs without a generic alternative can suffer from price gouging. The entire Epipen saga, where prices skyrocketed from about $100 to over $600 after the company was sold, illustrates the power that these pharmaceutical companies have over the public.

The world of generic drugs is changing as well

The generic drug industry are themselves no angels. The generic manufacturers are attempting to capitalize on their market position by getting in on the price gouging game. The generic industry has begun to heavily consolidate as companies like Teva acquire smaller manufacturers. Teva is now the largest generic drug manufacturer in the world. Consolidating generic pharmaceutical companies join together ultimately for the purposes of stifling competition. With less competition, generic drug manufacturers can charge higher prices. They get a bigger share of the profits as more generic companies consolidate. It’s ultimately the consumers who are being hurt by a lack of competition in the generic segment of the market.

Brand manufacturers are also opening their own generic companies. That allows them to keep costs up because they don’t compete with themselves. Once those patents finally do expire, the generics get involved and people are basically on their own. Some people even go bankrupt because of their inability to pay for these medications. They’re also dying because they can’t pay for their drugs. Generic medications have also at times shown to be not as good as their brand name counterparts. It’s tragic that people are taking generic pills that may not even work for them because of shoddy manufacturing practices by the generic companies.

Pharmaceutical companies create life-saving medications. But they need to do it in a way that keeps the medication they produce within reach of the people who need it.