Americans are starting to feel the pinch from high drug prices. In a survey recently reported by Consumer Reports, one-third of Americans said they paid an average of $39 above the usual cost for their latest prescription. One in ten said they paid $100 or more out-of-pocket. Forty per cent of people answering the survey said that during the past 18 months, high prescription prices forced them to cut corners with their medications; while many say their increased drug costs make them twice as likely to avoid seeing their doctor or forego a medical procedure.
Even Congress has noticed how drug costs have squeezed their constituents. Earlier this month Senator Bernie Sanders (D-Vt) and Rep. Elijah Cummings (D-Md) sent a letter to Valeant's CEO, Mike Pearson, demanding the following information by September 3:
"Dates, quantities, purchasers and prices paid for all sales of the drugs; total expenses relating to their sales, including specific amounts for manufacturing, marketing and purchasing of [active ingredients]; sales contracts, profit projections and more."
Pharma companies and their powerful lobby, the Pharmaceutical Research and Manufacturers Association (PhRMA), have long claimed that such costs drive up drug prices. Now the states are demanding information to see if that's true or if drug companies are gouging prices to enhance their own profits.
Pharma spokesmen resist [these calls] for transparency, claiming that the measure would dampen incentives for companies to develop lifesaving therapies. Their objection also sings the PhRMA's old tune that while drugs constitute only 10 to 12 percent of health care costs, they save the system money by keeping patients out of the hospital.
Those arguments to defend exorbitant prices and prevent legislative oversight are irrelevant and misleading. Although drug prices at this time do represent 10 to 12 per cent of total health care costs, they are rising at a faster rate than the costs of other health sector components.
Secondly, prices have been rising enormously for almost all drugs, regardless of their respective contributions to life and well-being. When the prices for drugs that have been on the market for a decade or two shoot up between 50 and 500 percent in a single year, something is behind it other than some newly discovered ability to save lives.
Third, while many drugs help to delay or avoid hospitalization and other health care costs, the same argument can be made to defend the prices of food, good housing, safe automobiles and scores of other products and services. When an increasing number of Americans have to choose between paying for their medications and paying for food, housing and other necessities, then the argument about drugs saving other costs and enhancing life loses its persuasiveness.