Prescription Drugs and Healthcare Cost

Drugs today have not only caused us to live longer but they have also improved the quality of our lives. A lot of illnesses can be managed effectively with medications, reducing the need for hospitalization or nursing care. Thus, medications are cost-effective in managing our diseases. Newer and better drugs are being developed each year.
Many people, however, struggle with how to afford prescription drugs. The elderly, those 65 years old and older, are especially hit hard. This group, which is expected to double by the year 2030, uses about 35 percent of all prescription drugs.
The classes of people most affected by the high cost of prescription drugs are:

• People who have no health coverage.

• People who have health insurance but their policy does not provide prescription drug coverage. This applies to seniors on regular Medicare since Medicare does not provide prescription drug coverage.
• People who have insurance coverage but are given prescriptions that are not covered by their plan. This applies to individuals with managed care coverage who have been given a prescription for a drug that is not covered by the plan.
• Individuals with prescription coverage, especially those on multiple medications, who face increases in their share of the cost of the drugs.
  

The debate over the cost of prescriptions is often complex and emotional. Drug companies are in the business of producing drugs for a profit, and they have done a great job in producing newer medications that work better or safer than older medications. It costs a lot of money, to the tune of over $500 million, to get a product to the market effectively.
The debate has always centered on how much these drugs should cost. Drug companies need to get back the money spent in developing a new drug, but more importantly, they need the profits to be able to have enough resources to fund the research to produce the next generation
of drugs. Most of the new drugs used around the world are developed in the United States. This is because the U.S. market is the only market that allows drug companies to price their products using market forces as opposed to the government imposing price controls. This does not mean that drug companies can charge whatever they want. Market forces prevent them from doing so. Competition within the industry, either from other brands or from generics, when available,
helps to ensure that drugs are not priced as much as the manufacturer might like.
Another market force in play is demand for the drug. Newer medications usually are safer or work better than older medications. The drug company might have to spend a huge amount of money educating the public about the drug, in the form of advertisements and consumer brochures, to create a demand for the newer medication. With greater demand, the company can charge a bit more, just as the manufacturer of any product might be inclined to do.