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Just What the Doctor Ordered: The Case for Drug Price Controls | Harvard Political Review

Unlike many biological diseases, however, this tragic phenomenon has a readily identifiable cause and, potentially, set of cures. When patients who failed to fill out their prescriptions were asked to provide a reason for doing so in a 2017 NPR Health Poll, 67 percent of respondents cited high cost, a number which rose to a staggering 94 percent for patients with incomes less than $25,000. Drugs sold in the United States are on average two to six times more expensive than they are in other countries, and are a key contributor to the rising healthcare costs that have caused approximately 62 percent of all personal bankruptcies in the United States.

This alarming trend is occurring in spite of record-breaking profits for multinational pharmaceutical companies. The average pharmaceutical company has a profit margin of 21 percent, which according to 2015 Forbes estimates is the highest of any sector. While these companies should be lauded for developing breakthrough therapies and cures never before thought possible, the blatant price gouging that they sometimes practice should not be tolerated by American regulators. To promote public health and ensure that patients are able to fulfill their prescriptions at a reasonable price, American policymakers thus have a moral obligation to replicate the success that other countries have already had in instituting price controls on drugs.

First, price controls would help to address the problem of prescription non-adherence and thereby save lives by reducing the cost of drugs. A two year study of 25,000 breast cancer surgery patients found that women who received a Medicare D subsidy (which substantially reduced their out-of-pocket costs for prescribed medication) had 30 percent higher odds of fully adhering to their prescriptions than women who did not receive a financial subsidy. This led the authors to conclude that legislation aimed at increasing prescription adherence should “focus on lowering out-of-pocket cost…[g]iven the high costs of …medications.” A 2014 quantitative analysis of price caps on name-brand drugs echoed these results, finding that capping the price of drugs 20 percent lower than the monopolistic price point at which they would otherwise be sold would lead to a 23 percent increase in the number of patients that could take that drug. The caps would cost only 1 percent of overall pharmaceutical revenues.

Skeptics of price controls, however, often counter that artificial price caps will be “harmful to Americans’ future health” by reducing the ability of pharmaceutical companies to invest in high-risk, high-reward drug development research. The high prices of drugs are therefore viewed as a “necessary evil” to ensure the continued development of novel therapies.

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Just What the Doctor Ordered: The Case for Drug Price Controls | Harvard Political Review.