Many people depend on prescription drugs to stay healthy; however, their prices keep rising yearly. These price increases put essential medications out of many people’s reach, especially those in low-income communities. This is also evident in the rising drug pricing in workers’ compensation. But what is causing this price hike? myMatrixx has released a white paper that explains the causes of rising drug prices in detail. However, let us explore some of the reasons.
New drugs undergo in-depth research, rigorous testing and extensive clinical trials before being released. This process is expensive and takes a lot of time to complete. Pharmaceutical companies place high price tags on them to recoup their investments.
On average, it costs around $1.3 billion to bring a new drug to market. This is a lot of money to recoup, but we must also consider profits. Unfortunately, all these costs are passed to the consumer, resulting in high drug prices.
The cost of goods and services has gone up across the board, and that includes prescription drugs. Manufacturing costs, raw materials, logistics and employee wages increase over time. Pharmaceutical companies pass these cost increases to consumers by raising drug prices. Unfortunately, inflation will almost always occur, so drug prices in the United States will continue to rise.
As the US population increases, there is a corresponding rise in the demand for prescription drugs. High demand increases prices, so consumers pay more for the same amount of drugs. Major pharmaceutical companies also advertise their products aggressively, which stimulates demand.
Pharmaceutical companies often develop “new and improved” versions of their drugs, and these new formulas cost money to research and develop. So, as mentioned above, these R&D costs will be transferred to the consumers. New medicines are generally more expensive than their older versions. However, this mainly applies to brand-name drugs because generic drugs are significantly cheaper.
When pharmaceutical companies develop new medication, they patent the formula, thus ensuring their exclusive right to produce and market the drug. This gives them sole discretion to dictate the drug’s price as they have no competition. Some major pharmaceutical companies extend their patent protection to fully take advantage of their monopoly. This means they will increase prices whenever they feel it is necessary.
Consumers should substitute brand-name drugs for generic ones whenever possible. As long as a drug has been approved by the Food and Drug Administration (FDA) to treat an ailment, it is safe for consumption. They should also work at companies that offer reasonable health insurance so they do not pay excessive out-of-pocket costs for essential medication.
The ever-rising cost of prescription drugs is mainly caused by the factors discussed above. However, myMatrixx gives a more detailed explanation in their white paper linked to this article. Medicine is essential for survival, and its rising cost is an inconvenience people must deal with unless the government implements a policy to address the issue. In the meantime, consumers should embrace generic drugs whenever possible, as they are suitable low-cost alternatives to brand-name drugs.