FREE ESSAY ON GETTING OUT OF REACH

GETTING OUT OF REACH

Getting Out of Reach
Prescription drug prices are rising much faster than the rate of general consumer
inflation. The most heavily affected are those who can least afford it, like older
Americans living on fixed incomes, and the working poor with inadequate or no health
insurance. The rise in drug prices is causing the public to ask why. The reasons include
the immense research costs, consumer advertising and the growth of managed care.
The continue rise in prescription drugs costs has touched off intense public debate on
how best people can get some relief. Some politicians and consumer groups have pushed for
some form of price controls. Drug companies oppose price regulations. They contend it
would restrain innovation in an industry that invests billions of dollars annually on
research.
Joe Madera, a retired man in his late 60s living in Pomona, CA, pays more than $250 a
month out of pocket for prescription drugs to maintain his diabetes under control.
Medicare covers his doctor bills and any hospital visits, but the federal health program
does not cover prescription. While this man's household income is fixed, the cost of his
medication just keeps going up.
Most Americans do not feel the increase in drug prices directly because they purchase
prescription medicines through their employee health plans or their HMOs, where they do
not pay the full price, often making only a $10 or $20 co-payments. The rise in drug
prices does hit this group indirectly. Many health insures have blamed higher drug cost
as the reason behind hikes in medical premiums or restriction of benefits. 
One reason why retail prices are going up is hat the new generation of drugs is expensive
to produce. The cost of research and developments are high. Creating a complex,
genetically engineered drug versus producing a conventional drug is like the difference
between manufacturing a Ford Escort car and designing a fine German Mercedes-Benz.
Indeed, the process of taking a drug from the laboratory to the patient is a lengthy one,
requiring years and costing millions of dollars. And success is not guaranteed. Often
there is a huge difference between how a drug behaves in the test tube and how it acts on
humans. New drugs typically require several phases of tests on humans to demonstrate that
they work and do not produce serious side effects. Only one medicine out of five makes it
through human clinical tests, a representative for the Pharmaceutical Research and
Manufacturers of America argue. For the drug companies, these research duds are necessary
cost of doing business. The drug makers argue, however, that prices for the one in five
therapies that do make it to market must compensate for the costs associated with those
that do not. Consequently, the successful drugs have higher prices.
Advertising is another factor why prescription drugs prices are going up. Drug companies
spend millions of dollars in advertising and promotion in order to influence treatment
decisions. Physicians are bombarded by information aimed at convincing them that a
particular drug is the best. Soon, these new treatments became the accepted standard
practice. And even when equally effective drugs that cost less are introduced, doctors
rend to continue giving their patients the most expensive medicine, which means prices
remain high. In recent years, drug companies have boosted efforts to pitch their products
directly to consumers in TV, radio, magazines and newspapers ads to create brand-name
awareness. According to a study by the National Institute for Health Care Management, the
10 most heavily advertised drugs accounted for about 22% of the total increase in drug
spending in the last five years. "The most heavily advertised drugs are the ones whose
price increased the most," the Institute affirmed.
Drug inflation is also caused by the rise of managed care. According to Los Angeles Times
newspaper, managed care now covers 60% of the insured population in the United States and
even higher percentage in California. Large HMOs and other managed care plans use their
bargaining power to demand discounts when they make bulk purchases of prescription drugs.
As result of that, pharmaceutical companies have tried to regain some of this lost
revenue by charging more to people without drug coverage who must pay full retail prices.
This practice is knows as cost shifting.
The nonstop rise in prescription drug cost has affected many people; especially older
Americans who live on fixed income. People whose health depends on special medications
are the most affected by this trend. Are there legitimate reasons behind this trend? Many
people ask. The pharmaceutical industry is one of the most profitable industries in
America. So are drug prices inflated? Joe Madera, like many other older Americans is fed
up. "The situation is really discouraging," he says. The Federal government needs to step
up and impose some kind of price control. In addition to that, politicians have to find
the way to give to people like Joe Madera some relief.