This article is about conflict between for-profit companies over who should get the blame for escalating prescription drug prices. Turns out there are several candidates:

Pharma, under attack for drug prices, started an industry war

Of course, some of it is simple exploitation by unscrupulous executives, like Martin Shkreli. Then there are unjustifiable price increases for devices like the EpiPen.

As I’ve said before, we really can’t be shocked when a profit-driven organization, especially the investor-owned sort, aggressively takes advantage of an opportunity to boost the bottom line. They’re in business to make money. When the need for profits dovetails with the best interests of the consumer, everything’s great. But when they diverge– well, you get one guess whose needs are likely to take precedence.

Then there’s the impact of the fast-rising pharmacy benefit management industry. This is a second set of for-profit businesses that take their own cut out of the price of a drug. And after the insurance company gets its discount, Big Pharma complains that some 30% of the final cost winds up in the hands of intermediaries such as these. Drug companies are then forced to raise their prices in order to meet their own financial expectations.

Don’t forget this is people’s health we’re talking about. I’m not always sure everyone remembers that. As a former insurance VP once said: we spend our day looking at spreadsheets, not people. You can lose sight of the impact of your decisions on your customers.

Anyway, every article I’ve seen on this subject has mentioned two changes to current practices that would yield quick positive results in terms of drug prices. They are:

  1. Import drugs from other countries where they can be had at a substantially lower price. Given our extravagant pricing structure, that’s almost any other country. The savings could be passed on to¬† the consumer, while maintaining a respectable profit margin.
  2. Allow the US government to negotiate better prices for its purchases. This seems like a no-brainer. Right now, for example, Medicare is prohibited from such negotiation — meaning the price is effectively set by the seller, and not surprisingly, it’s often a lot higher than in other places. It’s like a homeowner who could force a buyer to pay whatever he happened to think his house was worth.

Almost every expert has expressed support for at least one of these changes. But there’s been enough opposition– all that lobbying by Big Pharma plays a role– to keep both in a state of suspended animation.

Let’s hope that doesn’t continue.


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