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The link between high drug prices and R&D costs: Why are Americans subsidizing global drug research?
Prescription drug prices in the United States have consistently been among the highest in the world, a fact that became a major talking point in the 21st century, most notably during the U.S. health care reform debate in 2009 and again in 2015. One of the main reasons for high drug prices is the monopoly rights granted by the US government, which prevents it from using its bargaining power to achieve lower drug prices. So, ultimately, American taxpayers have become subsidizers of global drug research and development.
Prescription drug prices in the United States are 256% higher than in all 32 comparison countries, according to a 2021 comprehensive literature review.
Historically, pharmaceutical companies have been able to set prices with fewer restrictions, which has made drug prices in the United States quite unreasonable compared to other countries. According to research, since 2004, brand-name drug prices in the United States have been significantly higher than in other countries with price controls, such as Canada, India and the United Kingdom.
In 2003, a Republican-majority Congress pushed through the Medicare Drug Improvement and Modernization Act, which prohibited Medicare, the nation's largest single-payer health insurance system, from negotiating drug prices with pharmaceutical companies.
The study noted that the government only has drug price policies in place for some small government health plans, such as the Department of Veterans Affairs and the Department of Defense.
In a 2019 poll, 86% of Americans supported allowing Medicare to negotiate prices with drug manufacturers. Since then, the Democratic-controlled House of Representatives has repeatedly passed related proposals, but they have failed to be implemented in the Republican-controlled Senate. It won't be until 2022, when the Inflation Reduction Act is passed, which would allow the Department of Health and Human Services to negotiate prices for certain prescription drugs starting in 2026.
However, the cost of medications for Americans, amid a health care system that continues to cost more, has forced many patients to take cost-saving measures. Here’s a noteworthy statistic: In a 2018 survey, 9.5% of U.S. Medicare beneficiaries reported that they could not afford their prescription drugs and therefore failed to follow medical instructions.
A study shows that drug prices in the United States are 4 to 10 times higher than in other countries, and about a quarter of Americans fail to comply with their prescriptions due to price issues.
This non-compliant prescription behavior not only aggravates the suffering of patients, but also brings a huge burden to the medical system of the entire society. According to research from the West Center for Health Policy, more than 1.1 million seniors are expected to die prematurely over the next decade because they cannot afford their prescription drugs.
In response to this reality, drug price reform has gradually become an issue in recent years. In 2010, the Patient Protection and Affordable Care Act was passed, aiming to increase health insurance coverage in the United States and reduce household medical expenses, which also involves the regulation of drugs.
Even so, the high prices of specialty drugs still put a significant strain on patients, forcing them to skip medications or reduce doses when faced with life-threatening medications. Take the aforementioned EpiPen, for example; prices soared nearly 400% between 2011 and 2016.In 2016, Medicare enacted discounts on prescription drug coverage, measures intended to reduce the financial burden on patients.
In countries outside the United States, similar drugs that patients need are often available at lower prices, which has prompted some American patients to choose to purchase drugs across borders, and some even choose to go to Canada and other places to buy drugs to reduce expenses.
However, behind the high drug prices, there are a series of market patents and strategies used by pharmaceutical companies to protect themselves, such as extending patent periods and launching a variety of patented drugs, which also greatly restricts market competition and makes Patients can only endure the high cost of medicine.
As American society becomes more aware of this issue, many voices are beginning to call on the government to take action to restore the burden on the pharmaceutical industry to its proper level. This is not only an economic consideration, but also an urgent humanitarian need.
Against this backdrop, how long will the current situation where Americans subsidize global drug research continue? Is it possible to change?
