There’s an epidemic of rising prescription costs in the USA. What’s behind it, and what can we do? Find out here.
The cost of healthcare is rising. And there’s one area of the healthcare system that’s seen a steeper rise than most – prescription drug costs.
Here’s why prescription drug costs are rising, and what (if anything!) you can do about it.
Drugs are getting more expensive
The term “out of control” springs to mind when we think about how drugs are getting more expensive. And before we get into why they’re more expensive, it’s worth taking stock of just how MUCH the price has gone up in recent years.
A recent article reported that between May 2015 and May 2016, prescription drug costs increased about 10%.
Which, when you say it like that, doesn’t sound like all that much.
But consider this:
- In that same time, inflation went up 1%
- Food and booze prices increased 2.8%
- Clothes went up 5.7%
What this means is that the cost of prescription drugs is increasing at a rate that far outpaces other goods on the market, making them increasingly less affordable for everyone.
WHY drugs are getting more expensive
There are plenty of explanations as to why prescription drugs are getting more expensive over time.
There’s probably no single correct answer.
Here are the most popular reasons:
The industry explanation:
The pharmaceutical industry argues that as drugs get better and more complex, their manufacturing and research and development costs increase. Basically, it’s the law of diminishing returns – the harder you work, the harder the work gets. However, this doesn’t really hold up when you look at
Basically, it’s the law of diminishing returns – the harder you work, the harder the work gets. However, this doesn’t really hold up when you look at pharmaceutical compensation.
The economic reason:
As the baby boomers retire and age, the healthcare system has more patients. Since patients are fundamentally consumers of prescription drugs, demand for these drugs increases. As demand increase, so too does price.
Since patients are fundamentally consumers of prescription drugs, demand for these drugs increases. As demand increases so do prices.
For example, most governments grant a grace period when a drug is new where no other competitors are allowed to make that drug. This creates a temporary monopoly and incentivises drug companies to continue to develop new drugs.
However, in recent years, drug companies have begun a process called ‘evergreening.’ This is when they make one small alteration and re-patent the drug. This extends their monopoly and allows them to keep prices artificially high.
The second major anti-industrial argument is more based on economics. Basically, the argument is that drugs are an inelastic good – that is, demand isn’t really sensitive to price.
For example, let’s say crackers cost $10. If they increase the price 250% to $25, most people would just stop buying crackers.
But when drug companies did exactly this to EpiPens, increasing the price 250% from $57 in 2007 to $200 in 2016, people with allergies still had to buy the pens. Thus, demand is inelastic.
What you can do about it
The reality is, as consumers there isn’t a lot we can do.
We can pressure our elected officials and the agencies they control to stop ‘evergreening’ and other such practices. But the simple matter is, drugs prices have been going up for years, and show no sign of slowing. And if you need a product to survive, then you don’t have a lot of choice of whether or not to buy it.
Fortunately, you can decide WHERE to buy it. Canadapharmacyonline.com has better prices than many competitors for the same top tier drugs and is a major source of relief for beleaguered and sick patients on both sides of the border.