Here’s How And Why Big Pharma Keeps Drugs So Expensive

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Rising drug prices is not uncommon. It’s a part of the pharmaceutical industry’s method for continuing to generate profits, and in turn, develop new drug therapies. Since the early 1980s, pharmaceutical companies have benefitted from the Drug Price Competition and Patent Term Restoration act. This law essentially allows a company to monopolize the market with a new drug for a specific period of time, before other companies are given the choice to create their own versions – also known as “generics.”

The spirit of this model has worked well for both the industry and the consumer for decades. Manufacturers are willing to abide by these statutes as they’re given time to recoup their costs for developing unique drug therapies, before their exclusive hold on said drug ends. The public is then given access to the more affordable generic versions that are later made available by other companies due to the competitive market.

This system is sadly no longer working. Despite companies being rewarded for their unique and innovative products, more and more are finding loopholes that enable them to monopolize the market for longer. The competition are no longer introducing more affordable “generic” versions that better suit consumers. Why? Because those pharmaceutical companies are paying them off in order to make bigger profits.

In her editorial for the Harvard Business Review, Erin Fox, Director of Drug Information at the University of Utah Health Care, breaks it down:

“One of the ways branded drug manufacturers prevent competition is simple: cash. In so-called “pay for delay” agreements, a brand drug company simply pays a generic company not to launch a version of a drug. The Federal Trade Commission estimates these pacts cost U.S. consumers and taxpayers $3.5 billion in higher drug costs each year.”

Fox goes on to list three significant ways that pharma manages to circumnavigate federal laws. This includes:

Citizen petitions.

These delay the approval of generic drugs. They sound like they’re created by the public, yet 92% of these petitions which the Food and Drug Administration legally has to prioritize, are submitted by pharmaceutical companies. Corporations in the US possess the same constitutional rights as people. In 2014 the Supreme Court endorsed “corporate personhood” – this allows businesses to hold rights to religious freedoms under federal law.

Authorized generics

They’re not generics at all – they’re the same drug, produced by the same company, but using a different name.

Sample access

The drug creators are preventing the competition from creating their own generics, by restricting access to the actual drugs themselves. According to Fox, they regularly cite FDA requirements as a way to get around this.

Ultimately, these decisions by pharma manufacturers end up saddling consumers – either medical centers of patients themselves – with a considerable financial burden. The rising cost of pharmaceuticals continues to place hurdles in front of everyday Americans who may need access to potentially life-saving medications.

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