Of all industries, the drug industry is probably the most notorious for its steep prices. Chemical substances, able to make changes to the organism’s physiology, will always be in demand by the population and the government. The healthcare system relies on the supply of drugs to prescribe and deliver treatment. If the government is not able to procure enough medications, the overall healthcare will suffer. Unfortunately, at the current trajectory, drug prices continue to increase. Unless a solution is found to regulating the prices, the United States will not be able to adequately deliver healthcare to the American population. Understanding what constitutes the reasons for the rising drug prices is essential in ascertaining the correct policy.
There are two primary factors, necessitating the high prices of medical drugs. First, creating a drug is an expensive process in itself. Over the course of the process, clinical trials produce many failed prototypes. All such procedures demand high expenditures by the manufacturing companies, thus, forcing them to set high prices, which would make up for the production costs. Second, after being made available on the market, the uniqueness of drugs is limited. At some point, the formula is leaked and the same chemical structure can be replicated by other drug manufacturers. The problem is that these equivalents substitute the original products at a cheaper price. Not only do these alternative drugs not possess the same qualities, but they also compromise the incomes of the pharmaceutical companies, which manufacture those drugs (Shepherd, 2017).
The most viable way to resolve this problem is via introducing governmental regulation. The target population is the Americans who can access governmental healthcare. As the problem with rising drug prices encompasses all states indiscriminately, the policy should be implemented on the federal level. The major stakeholders are the pharmaceutical companies, such as Pfizer and Vyera Pharmaceuticals. Their cooperation is essential as the policy will require them to alter their prices policy in order for the solution to work.
The actual steps to changing the status quo involve solving the problem of cheap generics. First, it is the availability of substitutes that drives the manufacturers to increase prices. Therefore, it is necessary to limit the opportunities of other drug manufacturers to produce their products (Gupta et al., 2019). It can be accomplished with stricter control of the clinical requirements. Second, the cheapness of substitute drugs drives the original ones out of the competition. Therefore, a policy should be implemented, which would impose limits on the manufacturers. As a result, there will be enough supply on the market to meet the healthcare demands at affordable prices without compromising the quality.
The success of the policy would be deemed based on the subsequent evaluation. The evaluation should be conducted a year after the implementation because this timeframe would allow gathering the sufficient data. The evaluation should ascertain whether the initial goal – stopping the unrestricted increase in price was achieved. However, chances are that intended price control will enhance the unofficial market, where the same drugs would be available at a cheaper cost. An alternative solution would be labelling the FDA approved medication. Its absence would alert the consumers to the presence of cheap generics.
Altogether, governmental regulation is essential in controlling the drug prices. Policy should be implemented on the federal level in order to affect the whole US. The policy itself will encompass two steps – setting the limits on prices and more strict regulation of quality. In case the price regulation enhances black market, all original drugs will be required to carry the appropriate label. Provided the successful implementation, the threat of cheap generics outcompeting the manufacturers will be significantly lowered, thus stabilizing the drugs prices.
References
Gupta, R., Shah, N. D., & Ross, J. S. (2019). Generic drugs in the United States: Policies to address Pricing and Competition. Clinical Pharmacology & Therapeutics, 105(2), 329-337. Web.
Shepherd, J. (2017). The prescription for rising drug prices: Competition or price controls. Health Matrix, 27(1), 315-346.