Are the high drug prices a result of lack of regulation?

[Anonymous]

Drug prices in the US are extremely high. Is it due to the fact that they are not regulated by the goverment?

[Anonymous]

The high drug prices in the US are due to a complex combination of factors, including the lack of regulation, among other things. One of the main reasons for the high cost of drugs in the US is the way that the pharmaceutical industry operates. The US has a largely market-based system for drug pricing, which means that drug companies are free to set their own prices based on market demand and other factors. This lack of price regulation allows drug companies to charge more for their products, which can lead to high drug prices for consumers.

Additionally, the US has a complex healthcare system that is made up of multiple stakeholders, including insurance companies, hospitals, and doctors. This complexity can lead to added costs and inefficiencies in the system, which can contribute to higher drug prices.

Another factor that can contribute to high drug prices is the cost of research and development. Drug companies invest significant resources in developing new drugs, and these costs are often passed on to consumers in the form of higher prices.

Overall, while lack of regulation is one factor that contributes to high drug prices in the US, there are many other factors at play as well. Addressing this issue will require a multi-faceted approach that involves various stakeholders, including government agencies, the pharmaceutical industry, and healthcare providers, among others.

[Asker]

This answer is just what i needed thank you!! i Was thinking the exact same things!!

[BCA6010]

"Not regulated" is an interesting way of saying it... The handful of pharmaceutical companies that dominate the US market also own virtually all of the smaller and lesser-known ones, as well as the rights to distribute anything that happens to be foreign-made. They operate with the highest profit margin of any industry in the country while also taking in massive government subsidies. Furthermore, roughly 3/4 of US congressmen and senators are stockholders in at least one of the big three.

The excuse is generally something to the effect of "we use that money to fund research and benefit the world," but it's also worth mentioning that this is pretty uniquely an American problem... I was able to purchase identical medication for something in South Africa for about 1/20th the price here in the US, even made by the same company.

The bottom line here though is government has exactly zero interest in curbing this, because it is directly benefitting them personally. If you've ever wondered how a politician increases their net worth from six digits to eight digits in the span of a couple terms, this is one way.

[Asker]

Thank you so much!
The lack of competition (monopoly) seems to be a big factor in the high drug prices.

However i am not sure how politicans benefit from what you said?

Also in Europian countries the government usually determines/regulates the prices based on the clinical benefit of the medicine instead demand. In US the price is based on how much people are willing to pay, and because of the fact that medicine is so essential, people are willing to pay a lot. Could this also affect the prices?

[BCA6010]

As stockholders in companies that are not only a monopoly, but also contracted by the government, they directly influence the value of their stocks and create a mutually profitable relationship. They also have the power to choose winners and losers, so it's virtually impossible to actually compete. Furthermore, the research conducted by these companies is heavily weighted in favor of ongoing treatment/prescriptions rather than curing ailments, which is significantly more profitable.

[MuskratLove]

You can thank the trial lawyers for that. A pill that's $5.00 in the US, is about 5 cents in Thailand. And in Thailand you don't need a prescription.

I had a doggy with epilepsy, and I went to the vet to get her some tranquilizers for the fourth of July fireworks. The vet said he couldn't prescribe the medication without examining the dog, and charging for the visit. I was too poor for that, so I just gave Muffin a Benadryl, and she slept through the explosions like a baby. lol

[WindAtMyBack]

If anything it's the other way around. The standards are very high, which makes it expensive. Anything medical in the US is highly regulated and controlled. That increases prices.

On top of that, the US basically subsidizes the rest of the world. That makes it more expensive in the US and cheaper everywhere else. The US does as much medical research as the rest of the world combined. It used to be even higher, like 70% or so. A large portion of that funding comes from the government (tax payers), and the rest is mostly funded by the medical companies. The portion the government pays for is decreasing as a percentage, and the companies are funding a higher percentage.

Like most companies, the large majority of pharmaceutical company income is funneled back into the company, including research. Drug research can be extraordinarily expensive and risky. Years of research can go down the drain if a drug doesn't work, or it's not approved, which does happen.

So what would happen if US drug prices were the same as other countries? The only ways that could happen are:

1) Prices in the US drop to equal the current price of other countries. Since the US is a big country that means the pharma companies will have significantly reduced income. Without the income they will have to cut expenses, which will almost certainly include research.

2) Prices in the US drop a little, and prices in other countries increase a little so both are equal. The increase in price in other countries counter the drop in US prices, so the company income stays the same, and the funds for research stay the same.

3) Prices in the US stay the same, and prices in other countries increase to match it. This will result in higher income, and more research.

[Asker]

How would they just make prices 'drop'. There is no price control, so how would they make the prices drop?

[Asker]

Regulation on the drug prices by the state setting prices would be the answer wouldn't it? Thus regulation IS needed to make prices go down

[WindAtMyBack]

It doesn't matter how it's done. I was just talking about the results. The companies themselves cold lower the price. The government could force it lower. Or insurance companies could force it lower. I supposed the retailers or even consumers could force it lower.

How it's done is irrelevant to the point I made. As for regulation, it's VERY highly regulated with large amounts of red tape. That will always drive prices higher.

[genericname85]

prices always depend on the basic principles of the market. the basic principles of the market don't care whether a good is legal or not. it's all about supply and demand. if the demand is high, price is gonna be high. if the supply is high, price is gonna be low. so if supply is low and demand is high, that both increases the price.

[Asker]

Yea! That means lack of regulation so that demand does not determine the price is one factor in the high drug prices

[genericname85]

demand is determining prices either way. regulation is just gonna change the supply situation, not the demand situation. cause a crack head is gonna want crack no matter if it's legal or not.

[Asker]

How would it change the supply?

[genericname85]

well obviously if it's regulated, it will be sold in much more places. so supply is gonna go up. it's not only gonna be distributed by very few shady vendors who get caught sometimes. so as the supply goes up, prices go down. i don't know if the demand is gonna be significantly higher if it's not illegal anymore. i figure people who really wanna get it are already getting it.

[NamerOfStars]

Not... regulated... by... the government? Do you live in the mirror universe? The US has more and tighter drug regulations than any other country on the PLANET, aside from maybe Singapore. And the presence of those drug regulations, coupled with pressure for lawsuits and the 98% FDA rejection rate, is the core of why drugs are so expensive here.

[Asker]

I was thinking that drug prices were not regulated. There is no limit for how much it can cost.

[NamerOfStars]

Oh, prices! Well, that's a little different, then. But if those were regulated here, they'd either have to be regulated elsewhere (as it stands, we're paying for the drugs that DIDN'T make it to market; most of the rest of the world isn't) or companies would stop making them, since wasting millions of dollars on a failed product would bankrupt most companies; doing it on nineteen in a row would bankrupt ALL of them.

[Anonymous]

No they are high because there is no competition in the market, there are a handful of companies involved in the entire system and they have formed a cartel.

[Opinion Owner]

I guess i shouldn't have said 'no' because clearly regulation is the only thing which can break up the cartel.

[Asker]

Really, how so? I don't know the word in English, but we call it structural policy.

[AngryCarl2]

They are a result of corporate greed. The lack of regulation has done nothing to prevent it.

[Asker]

Their greed in what way? forming cartels?

[AngryCarl2]

It's not a question of cartels, because pharmaceutical companies hold a patent on their new drugs.

[gorydetails]

Lol, what? Drug price are high BECAUSE of regulation. Maybe take an Econ class

[Asker]

Narh bruv. The demand on medicine is endless, cause people are willing to pay a lot for something so essential which has made the prices go up. Other countries regulates the price to avoid this.

[gorydetails]

No, other countries put in price controls, which limits supply. Then the US subsidizes drug prices. Please, I’m begging you, take an economics class. Because you’re ignorant.

[Asker]

US only subsidized drug prices within Medicare. And price control is also a form of regulation

[Asker]

And i am not ignorant, i am just not from the US. I am writing a project that concentrates on the main challenges with the US healthcare system and currently i am researching the causes behind the high drug prices in the US.

[Asker]

How would you otherwise explain the fact that in the US they pay 60% more than Europians for the exact same drugs? Even Canadians pays much less.

[gorydetails]

I told you. We subsidize your drug prices by paying more. The US could fix its problems today if Americans could purchase drugs from other companies. Which is a regulation being REMOVED, not added.

[gorydetails]

Countries, not companies.

[Asker]

Yeah i remember Trump saying this in a speech. This is another type of regulation - not what i was thinking about, but this also has been a factor in the high drug prices. However i think monopoly (lack of competition), defensive medicine and the prices being based on demand is what is causing the high drug prices

[gorydetails]

Yeah, guess what allows monopolies to happen? Say it with me…. regulations.

[exitseven]

Yes, and also the lack of competition.

[Asker]

monopoly?

[In_Trance]

no it isn't

[Anonymous]

Inflation, lol.

[Asker]

Even if you take the inflation away, drug prices in the US are much higher from other industrialized countries. In the US they pay 60% more than Europians for the exact same drugs.

[Opinion Owner]

I agree, and their is no reason for it either.

[riverrat3]

Greed, exactly

[Anonymous]

of course