The Truth behind Exorbitant Prescription Drug Costs
Pharmaceutical companies claim that the tremendous costs of prescription drugs are due to the sheer amount of research and development that goes into creating them. However, there is more to it than that. Pharmaceutical companies have one primary goal: maximizing the value of the company to shareholders. Often, maximizing that value equates to Americans paying exorbitant prices for their prescription medication – and some of these medications keep people alive.
How It Works
Big-name pharmaceutical companies across the globe are jacking up the prices of necessary prescription medications for no other reason than to increase revenue. While the pharmaceutical industry is like any other in that a little competition is healthy for the end users of the medications, many companies have taken things to extremes. A company may buy a medication that it sees as undervalued, then raise the price by 100%, 200% or even as much as 500%. Aside from this, companies put a high price tag on new treatments and regularly raise the prices of older medications, too. While the shareholders may be happy about these changes, the people who need their medications to stay alive are often swimming in debt.
Valeant Leads the Industry in Price Hikes
The Canada-based company known as Valeant is perhaps the key player in the industry price hikes. Since early 2011, the company has raised the prices on its medications by at least 20% some 122 times. More recently, on February 10 of this year, the company purchased the rights to a pair of life-saving heart medications known as Isuprel and Nitropress. The day following the acquisition, Isuprel’s price rose 525% from $215.46 to a jaw-dropping $1,346.62 for a one-milliliter vial. Nitropress jumped 212% from an original price of $257.80 to an astonishing $805.61 for a two-milliliter vial.
Other Companies Following Suit
Another prime example is the acquisition of Cadence Pharmaceuticals by Mallinckrodt PLC. Mallinckrodt purchased the company in order to gain the rights to Ofermev, a pain injection they believed was significantly undervalued. Three months later, the price of the already expensive injection jumped 2 ½ times to $1,019.52 for 24 doses. Horizon, another common pharmaceutical company, purchased the rights for a pain tablet known as Vimovo from the well-known AstraZeneca in 2013. Horizon sold Vimovo for the first time on Jan. 1, 2014 at a price 597% more than the original cost, which was $959.04 for 60 tablets.
Even generic drug prices are rising. Doxycycline, the most commonly used malaria treatment in the world today, has increased from an average price of $20 for 500 tablets to a whopping $1800 for the same amount. The drug is readily available in other countries for $40, which is a testament to corporate greed in the North American pharmaceutical industry. These prices not only take a huge toll on the average consumer, but they drive up the costs of health insurance programs, too.