The Price of Drugs
There is an currently ongoing debate about the pricing of certain pharmaceuticals. Although this problem has been around for decades it picked up traction again when the price of the EpiPen was hiked up from $103.50 in 2009 to more than $608.61 in 2016. What makes this more disturbing is that the cost of to make an EpiPen is around $9 .This outrageous spike in cost made the EpiPen, a life-saving emergency treatment of anaphylaxis, less affordable for people who need it.
While it seems like this is simply corporate greed at the expense of the consumer it actually opens up a much more complex dialogue. Does a company have the right to increase the price of a product that people depend on? Do drug companies have to play by a different set of ethical rules? Can an increase in drug price help the consumer in the long run? There are many points of view for this story, and only when all of them are taken into consideration can progress be made.
In the US $450 billion dollars was spent on prescription drugs in 2016. So what do large drug companies like Pfizer and Merck do with that money. According to many pharmaceutical companies the extra profit made from drug prices go into research and development. This would lead to better drugs and maybe even new drugs for rare diseases. When it comes to smaller companies such as Turing Pharmaceutical, sometimes they need to increase the price for research to continue on lesser known diseases. When it comes to life saving drugs for patients with very rare diseases it can be very hard to generate revenue with very few patients. This gives the company three options: discontinue the drug, continue to lose profit on the drug, or increase the price of the drug. In Turing’s case they upped the price of the pill Daraprim, a drug that treats toxoplasmosis and prevent malaria, they increased the cost of the pill from $13.50 to $750 a pill. Although they have a obligation to shareholders to maximize profit and keep the company alive, at what point does that profit become greed? When it comes to larger companies like Pfizer that produce prescription drugs that are heavily used it becomes a different story. When checking Pfizer’s 2017 quarter 2 earnings report it can be seen that SI&A (Selling, Informational and Administrative costs) more than double the money put into research and development.
Although there may be financial consequences for keeping drug prices low, the average consumer must be considered. Drugs are what economists call “inelastic demand.” No matter the price of the good, the consumer demand will more or less stay the same. People with heart conditions and life threatening diseases don’t have a choice when it comes to buying medicine. Personally, I understand that companies exist to make profit, but sometimes that comes at the expense of the vulnerable. My mother works as a nurse at Piedmont and so she deals with patients every day. She tells me of people who need treatment but will get destroyed financially in the progress. I know many family friends who need are drained dry by exorbitant drug prices. No one should have to choose between financial well-being and their health.