HIGH DRUG PRICES

Community Problem Report: High Drug Prices

The University of Texas at El Paso
RWS 1301
11/13/2016
John Hughes

HIGH DRUG PRICES

Abstract
Skyrocketing prescription drug prices have become a significant source of unease and
trouble for patients in the United States. In order to solve the issue of high and increasing drug
prices it is important to understand the factors that contribute to and allow prices to reach such
heights. A lack of government oversight and legislation to protect consumers against a
pharmaceutical industry that can charge whatever they see fit is one of the various issues that
allow drug prices to rise rampantly. It is important to address this problem as it directly affects
individuals with medical conditions which require the consumption of prescribed drugs to sustain
or improve their state of living. It is important for pharmaceutical companies to make sufficient
profits to fund the development of next generation drugs however, there needs to be some type of
government oversight to assist in regulating prices so that the lack of funds isnt the only reason
a patient isnt able to receive life changing medications.

HIGH DRUG PRICES

Introduction
Daraprim is an oral medication commonly used to prevent a parasite infection known as
toxoplasmosis in HIV infected patients, which if left untreated can lead to brain damage. On the
month of August of last year a start-up company known as Turning Pharmaceuticals, formally
run by Martin Shkreli, acquired the rights to the drug. Turning Pharmaceuticals did not hesitate
to raise the price of the prescription drug from $13.50 per tablet to $750.00 per tablet, which
would increase a patients annual cost of treatment to the hundreds of thousands. Although there
was a lot of unrest and media surrounding the Turning Pharmaceuticals price hike it is certainly
not an isolated incident. High and increasing drug prices are most commonly observed on
recently developed drugs such as those used for the treatment of cancer and hepatitis C. A great
example of this would be Harvoni, commonly used for the treatment of hepatitis C, which can
run a patient between nine and eleven thousand dollars per 28 tablets. A full course of Harvoni
can take over twelve weeks to be effective which further contributes to its already high price.
Older Drugs
Although modern drug prices are extremely high and increasing at an alarming rate there
is also a concern for the prices of older drugs. Cycloserine is a drug that has been successfully
used for years in order to treat patients with a form of tuberculosis that is resistant to multiple
drugs. The tuberculosis treating medication experienced a drastic price increase in 2015 causing
it to rise from $500 for 30 pills to $10,800. The tremendous price hike of the medication came
shortly after Rodelis Theraputics obtained ownership of the drug. The price tag of $10,800 per 30
pills would have remained firmly attached to the drug had the previous owner not pressured
Rodelis Therapeutics into returning the drug to a non-profit organization within Purdue

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University. The new owner of the medication has since stated that they will now charge $1,050
for 30 pills, which is still over twice the original price of $500. There has been an alarming trend
occurring in which pharmaceutical companies buy older drugs viewed as undervalued and
drastically increasing their price. It is important to not only address and monitor newly
developed drugs, but to also keep an eye on well established older medications.
Specialty Drugs
Specialty drugs are used to treat rare diseases and account for nearly a third of the money
spent on drugs per year. Soliris is a drug that is used to treat a rare blood disorder known as
paroxysmal nocturnal hemoglobinuria that can cost over half a million dollars per year, and thus
is considered one of the most expensive drugs in the world. Specialty Drugs require the most
oversight and regulations due to the fact that drugs such as Soliris account for a third of all the
money that is used to purchase drugs per year.
A cartoon depicting
how someone with a
serious medical
condition may need
to hold off on
purchasing
potentially lifesaving
medication until, and
if, the patient can
afford it.

Trends and Effects of High Drug Prices

13.8 percent of adults bellow 139 percent of the federal poverty line stated that they do
not take their medication as prescribed, which could potentially lead to serious health issues. In

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addition, 6.5 percent of patients over the age of 18 delayed filling their prescription in order to
save money placing their health in risk. 4.2 percent of adults in America over the age of 18
sought alternative therapies, which may not be nearly as effective as the originally prescribed
medication. There are also a percentage of people in America, 1.6 percent to be exact, whom
purchased prescription medications from foreign countries that may very well lack an established
system that regulates and ensures the safety and effectiveness of medications. High drug prices
directly affect patients as there are many whom cannot afford to take their medications as
prescribed, predominantly among those bellow the federal poverty line.

What Causes High Drug Prices and What Can we do?

The reason for high drug prices can be nailed down to two main factors, a flawed patent
system that prevents competition, and the lack of government involvement and oversight. Each
factor will be expanded upon bellow, as well as a proposed solution.
Flawed Patent System
Pharmaceutical companies spend large quantities of money in slightly modifying existing
drugs in order to receive new patents that could potentially clear their path of any competition for

HIGH DRUG PRICES

up to 20 years. The very lack of competition caused by the flawed patent system in the United
States allows pharmaceutical companies to continue charging astounding sums of money for the
drug they developed well past the patent timeframe that was originally granted. One of the
proposed solutions for high drug prices would be to increase the production of biosimilars,
generic drugs; the only issue with this proposed solution would be that patents also protect
pharmaceutical companies against others attempting to produce biosimilar counterparts. It is very
important to grant pharmaceutical companies patents for a sufficient period of time not only so
that they can earn enough money as compensation for the time and money invested during
research and development, but to also gain ample profit to fund the development of new drugs.
However, the patent system in the United States must be overhauled as pharmaceutical
companies are taking advantage of it by investing time and money in slightly tweaking the
formula used to produce an established drug rather than investing in the development of new
drugs. The flawed patent system in the United States doesnt only affect the production of
biosimilars, which would be tremendously useful in battling high and increasing drug prices, but
also slows the development of new groundbreaking drugs as pharmaceutical companies would
rather spend time and money in extending patents.
Lack of Government Oversight
The main reason behind a pharmaceutical companies ability to charge and drastically
increase the prices of medications would be the lack of government oversight and involvement.
Presidential candidates, such as Hilary Clinton, have proposed plans pertaining to the
involvement of the American federal government in the regulation and oversight of drug pricing
and drug development. Switzerland is given as an example of how government involvement can
work if done well. The model set up in Switzerland revolves around establishing a list of

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approved drugs and then coming up with a cap on how much a pharmaceutical company can
charge based on research and development, along with the effectiveness of the drug.
Pharmaceutical Companies have continuously explained how the price tag on their product is not
as crazy as it might seem considering how much time and money their company has spent during
research and development. If pharmaceutical companies wish to hide behind claims of money
and time spent behind research and development as the reason they charge what they do, they
should also be able to produce documentation to support the claims. It is necessary to establish a
government organization with the sole purpose of monitoring the research and development of
new drugs in order to gather sufficient data to generate a fair cap on what the pharmaceutical
company can charge for a particular drug.
Conclusion
High drug prices in America will continue to be a serious problem until sufficient
measures are taken to ensure that pharmaceutical companies do not take advantage of the system.
Government oversight needs to become a regular part of the pharmaceutical industry in order to
monitor research and development to assist in the fair pricing of drugs. A patients life should not
be placed at risk simply because a drug costs too much.

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