Written by Annalisa Merelli
The Quartz
Originally published September 25, 2015
Here is an excerpt:
The US is an outlier among industrialized nation: it’s the only rich country that does not offer a publicly funded health system, relying instead largely on private insurance. This affects the pricing of drugs in several ways that are independent from the actual regulations imposed on pharmaceutical companies.
First, and perhaps most importantly, the power in setting the price for drugs is skewed toward drug manufacturers. Unlike countries where universal health coverage is in place, the negotiating is left to individual care providers rather than being in the hand of a large, publicly funded buyer that’s able to negotiate since it purchases most (if not all) of the drugs.
For those with health insurance, high drug prices result in higher premiums, but it’s hard to notice the price increases directly. This means consumers lack awareness of the actual medication prices, and consequently, any pressure to keep them under control.
Plus, the costs of bringing a drug into the US market are higher, partially because of marketing expenses. The US is one of only two countries (the other being New Zealand) that allows direct-to-consumer advertisement of prescription drugs, while elsewhere promotion is limited to medical professionals. This raises the already steep marketing bill of drugs manufacturers. As Robert Yates, former World Health Organization senior health economist told Quartz, “the amount [pharmaceutical companies] spend on marketing is massively more than they do on research and development.”
The entire article is here.