The Pharmaceutical Business in the USA
When I travel overseas, pharmacists marvel at the cost of prescription drugs in the USA, compared with their countries. But, there is little mystery as to why.
In almost all countries in the developed world, the governmental health authority maintains a monopoly on the purchase of pharmaceuticals. Health officials negotiate with the pharmaceutical companies, and have the likelihood of getting good prices, as they have no competitors for the products.
In the USA, the scenario is completely different. No negotiation on prices is allowed. The buyer (commercial pharmacies, clinics and hospitals) can only take or leave the asking price on patented medicines. The same medicine purchased overseas costs a tenth of what it does overseas.
Can’t the prospective customer in the USA simply choose not to buy the product? They can. But, if it is a medicine with no comparable, competing medication (and is protected by patent) and the buyer chooses not to purchase it, the buyer is vulnerable to a wrongful death lawsuit if a patient dies because the medication was unavailable. Big Pharm has a commercial interest in promoting such lawsuits.
One would think that once the patent on a medicine has expired, other manufacturers would quickly enter the market and sell generic versions of same. No so. Sometimes, the former patent holder will pay other drug companies a fee not to offer generic versions. Of course, this results in the maintenance of a high price on the drug.
An interesting exchange took place during the 2016 presidential debates between Hillary Clinton and Donald Trump. Mr Trump claimed that Ms Clinton was on the side of Big Pharm, and that he would personally negotiate with the drug companies to bring down consumer prices.
After almost a year in office, Mr Trump had taken no action and became increasingly scrutinized for his lack of action. Perhaps for the only time during his term in office to date, he admitted he had been wrong on the issue. He now believed that the fault did not lie with the drug companies. Foreign buyers were at fault, he claimed. They were paying too little for drugs produced by American-based pharmaceutical companies. He reasoned that if they paid their fair share, the drug companies would reduce their prices in the USA.
The Democratic Party response? Muted at best. Big Pharm is one of the very largest spenders of lobbying dollars–and they lavishly spend their money on Congressional campaigns of both parties.
It is an incredibly corrupt system, but don’t expect changes in the foreseeable future.
