The International Federation of Health Plans (IFHP) recently released their 2013 Comparative Price Report, which reveals drug costs in the US to be 10 times higher than in other developed countries.
Big Pharma in the US generates approximately $250 billion in prescription drug sales per year. This money isn’t made due to an increase of people needing prescription medications. Those profits are a direct reflection of drug companies are inflating prices in the US compared to what they charge other countries, but how can they get away with it?
The answer is simple enough: The US does not regulate the amount drug companies can charge, which gives them unlimited power in the US market. These companies justify their expenses by stating that they must cover the cost of research and development. If that was true, it would make sense for them to increase costs globally, which would make the price fairly even between countries. That is not the case as the chart below shows.
The situation is even more complicated when you realize that doctor’s offices and hospitals are given incentives and rebates when they give certain prescription drugs. They save money, or gain something for their efforts while the Americans using the drug pay inflated rates to stay healthy. It is possible for a hospital to buy a drug, and then make a profit of up to 50 percent after rebates from the drug company. Doctor’s offices work on the same type of system.
Medicare is the largest single drug buyer in the US, which means that every taxpayer in the US is contributing to the profits of both Big Pharma and hospitals without having any say in how the system works.
Kaiser Health took a poll that revealed 74 percent believe people in the US pay more than those in other countries. 72 percent of those surveyed believe the prescription drug costs in the US are unreasonable. The survey shows that people in the US are aware of the price inflation, and that they are unhappy about it. Unfortunately, there is very little that can be done to prevent it due to the laws, which make interfering with the drug companies pricing policies an impossibility.
If all of this money led to an increase in health care, it might not be so bad. This has not been the case. According to a 2014 report by the Commonwealth Fund, the US has consistently come in last on the majority of measures of health when compared to other developed countries. The inflated drug prices do nothing to increase the health of people in the US.