Within the first couple days of 2020, prescription drug prices have made their way up to just below a 10% increase in cost, with the average rise being 5%. A 5% increase may not seem like much but when people are already going deep into debt as well as dying over these prices, it adds up. While it is normal for the year to start with an increase in these prices, it’s important to ask whether these increases can be humanely justified.
The increase in cost for prescription drugs affects everyone differently. It depends on the type of insurance, type of drug, brand name, as well as urgency. According to Alex Azar, Secretary of the Department of Health and Human Services, “drug companies claim that the annual list price hikes do not really matter” due to the rise being on the list price which is before the middlemen come in such as “pharmacy benefit managers and health insurers.”
Despite drug companies saying that the increases will not affect consumers, some insurance deductibles reset at the beginning of the year which is the same time as the price hikes.
What is the reason for these price increases? For starters, without there being competition in the drug market, drug companies are able to charge virtually whatever they want considering people have to buy them anyway.
Cardiologist Dr. Kevin Campbell stated in an article in U.S.News that “in the case of insulin, the three name-brand makers actually filed a lawsuit to halt the development of generic bio equivalents.” These companies do not seem to be concerned about the well being of the patients in desperate need of insulin, but rather how to make as much money as possible.
Another reason behind the price increase is that it allows pharmacy benefit managers direct profit. Pharmacy benefit managers decide which drugs are covered by certain insurance plans. They tend to cover drugs with a higher list price. Drug companies make higher rebate payments on drugs with a higher list price. Rebate payments go to pharmacy benefit managers. If they choose to cover higher priced drugs, they make more profit.
The American healthcare system has largely become a business and it is shown through the creation of monopolies and desire for profit over well being of consumers.