Why Rising Drugs Hurt Americans (Even Those Who Don't Use Them)

Source: USA Today

The economic principle I’m exploring is “What are the current regulations regarding medicinal prices?”

My research question to help me study the economic principle is:
“How have these upward trends affected both patients and average Americans?”

A Jonathan Fielding article published in US News titled “The High Cost of Rising Drug Prices” demonstrates this economic principle by showing how the FDA is powerless to control prices, how consumers of these drugs are in danger because of the staggering prices, and how taxpayers are hurt by these prices too.

First, Fielding explains some of the root causes of these prices. He mentions that although the FDA is tasked with whether or not a product can go to market, their control is limited. He writes that “The FDA is tasked with approving medicines based on safety and efficacy, but cannot consider cost or value in its approval process.” This outlines the issue at hand, and why prices have been able to skyrocket. The demand will always be high for most medicines, so no matter what price they set the drug at, there will be a portion of society that needs it so badly that they will pay much above its worth for the drug. And with no limitations set by the FDA (or no value determined by them), companies have free reign to jack-up the prices exponentially, as they have in recent years with insulin and the EpiPen.

This leads into the effects on consumers. With these rising prices, there must be an affect on consumers, since they wouldn’t necessarily have a rising income to match the price hike. Fielding writes about this effect, saying how “costs of some commonly prescribed drugs have become unaffordable for many patients.” There have always been Americans who are impoverished enough to care more about getting food on the table for their family rather than paying for something to help their own issues. These price hikes are drastically increasing the number of people who could find themselves in this situation.

This leads into the final point that Fielding made. He shows how taxpayers are hurt by the increasing prices too. Fielding cites one specific drug, , and shows the amount of money Medicare used to pay for the prescription. He writes “Acthar cost a staggering $1.3 billion in Medicare payouts between 2011 and 2015.” As these prices rise, the government is going to need more money to pay for the same amount of drugs. The way to raise this money: taxes. Americans who don’t even use these drugs are being hurt by the price hikes.

In my next blog post I will research the question: Why lowering prescription prices could hurt the US?