Why Are Meds So Expensive in the US?

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health insurance

Whether you have health insurance or not, chances are that you’ve had to choose between buying an expensive prescription or going without. A 2018 national poll conducted in association with the University of Chicago discovered that an astonishing 44 percent of Americans don’t visit a physician when they’re sick or injured, due to overall cost.

So why are prescription medications and supplements in the US so expensive, and what can the average consumer do when they need treatment?

Governmental regulations

In many industrialized countries, there is a process of government drug approval in place. During this process, they assess data and evidence to determine whether the drug appears to be safe.

The government weighs the side effects against the proposed benefits, and then they negotiate a price with the pharmaceutical company. This is the most important factor keeping drug prices down in other countries: for a drug to be approved for use, the price must also be reasonable.

The United States, however, operates under the Laissez-Faire model of capitalism. Although the government has instituted various safeguards to protect American consumers in financial matters such as stocks and mortgages, it’s still against federal law for the government to interfere in pharmaceutical industry pricing.

Theoretically, citizens control the price in a free market economy, because they refuse to buy merchandise that costs more than the market can bear. In the case of pharmaceuticals, this damper is in place. One study indicated three in ten Americans skip prescriptions due to cost, and drug industry watchdog Prescription Justice estimated that 45 million Americans chose not to fill prescriptions in 2016.

What can be done?

Many other countries have determined that leaving the pharmaceutical industry unregulated is too great of a risk for their citizens. In the US, this type of model can only be adopted with Congressional approval.

There are downsides to a government approval process that includes price negotiation. The biggest downside is that sometimes safe drugs are not approved due to cost. This means that patients seeking a particular treatment may need to seek treatment in another country where the drug has been approved.

In the US, patients have long known that therapies, surgeries, and drug prices are cheaper in Canada and Mexico, and many people who need affordable medicine already seek treatment outside of the US. From getting LASIK eye surgeries to dental work and more elaborate procedures, the term “medical tourist” has been coined to describe people who vacation abroad so that they can obtain affordable medical treatment.

Given the fact that people are either already leaving the country to have their medical needs addressed or simply foregoing treatment altogether, there seems to be a compelling case for regulatory change to happen. Medicare is the most likely organization to make inroads toward a new process that is more affordable for seniors and other medically vulnerable Americans.

But again, their success will depend on the support of elected officials. As of this writing, the Affordable and Safe Prescription Drug Importation Act, a bill first introduced in 2017 to legalize and regulate drug imports, has stalled in the Senate.

In the meantime, many US citizens obtain prescriptions from US doctors so that they can order online out-of-country. Athletes and those recovering from debilitating illnesses can opt to buy steroids in Canada, and uninsured patients may opt to buy allergy medications, supplements, and much more.