Statistics show that the USA has the highest per capita pharmaceutical expenditure than any other country in the world. For example, in 2019, the USA spent a whopping $511.4 billion on medicine. This was a 5.7% increase from 2018 and 70% from 2009’s figures.
Narrowing down to the family level, the average American spends roughly $1200 on prescription drugs annually- and this is out-of-pocket cost only.
If you’re wondering why the cost of prescription drugs is so high in the US, you are not alone. We dug around this issue, and we have some answers for you.
2 Main Reasons Why Prescription Drugs Are So Expensive in the USA
Lack of price controls
Unlike Australia, Britain, and Canada, the US does not have a government panel that negotiates drug prices on behalf of the consumers. When pharmaceutical manufacturers want to introduce a new drug in a country like Australia, they need to set up a meeting with the Pharmaceutical Benefits Advisory Committee to prove its effectiveness.
If the drug is more effective than what is currently in the market, the committee suggests what the national health plan is willing to pay for the new drug. Besides protecting drug-dependent consumers from exploitative drug prices, this drug regulation prevents ineffective but expensive prescriptions in the market.
Things are a little different when you come to the USA. When drug manufacturers unveil a new medication, they negotiate the price directly with health insurance plans. Considering that Americans are spread across thousands of health insurance plans, the insurers lack enough bargaining power to negotiate for lower drug prices. As a result, the US citizens end up paying 2-3 times as much as citizens in other countries for the same drug.
20-year Patents (minimum)
When a pharmaceutical company develops a new drug, it applies for a patent to block copycat drugs for up to 20 years. The patent can be good for well over 20 years for a few reasons, though.
When a manufacturer applies for a patent with the US Food and Drugs Administration, the FDA may request repeated studies and experiments that clearly show the drug’s effectiveness and its possible side effects. For this reason, getting a patent approval may take up to 8 years.
Contrary to the common misconception, a drug patent protects it from copycats even before entering the market. That’s to say that the drug is technically patented throughout the testing and experimenting period.
Again, due to the extensive tests necessary to get approval, most manufacturers apply for more than one patent, which further extends the 20-year patent.
After the patent expiry, generic drugs come into the picture bringing the cost of the original drug down by up to 80%. It’s not that fast, though.
There are a few critical requirements that generic drug manufacturers have to fulfill before the drug is approved for use by the public. One such condition is to ensure that the drug’s chemical structure mirrors that of the original drug. Most pharmaceutical manufacturers take advantage of this requirement and continuously change the makeup of the original drug making it somewhat hard for competitors to come up with an identical drug. This offers the original drug manufacturer additional time to continue profiting on its invention.
How to Lower the Cost of Your Prescription Medications
The Trump administration recently issued a major late-term proposal to try and bring the cost of prescription down. It’s not clear whether the regulations will withstand legal challenges. All in all, US citizens can only anticipate that the next administration will offer a way out.
Before that, though, here are practical ways of reducing the cost of prescription drugs:
Use Rx discount cards
Today, most Americans are considering prescription discount cards, such as GetDealRX, as a possible way of bringing the rising cost of drugs down. Rx cards and coupons are free to use by everyone and are available for both insured and uninsured individuals. How much discount you get varies from card to card. But you can expect some excellent savings on your out-of-pocket cost.
Talk to your doctor during the visit
Talking to your doctor about your financial situation is another possible way of trimming your prescription costs. A recent survey by Consumer Reports showed that only 6% of US citizens speak up on their ability to purchase prescription drugs despite the skyrocketing prices.
By letting your doctor know that medical costs matter, he/she may offer possible solutions, including prescribing a cheaper drug that works just fine. You may also ask about non-drug remedies, such as therapies and exercises that may help.
Choose generic drugs (if available)
Most people think that generic drugs aren’t as effective as their brand-name alternatives, which isn’t true. For the record, the FDA approves generic drugs only if their chemical structure is identical to the brand-name drug they are trying to mirror. That’s to say that any FDA-approved generic drug will have the same effects as its brand-name competitor. The only difference between the 2 is that the generic drug may be up to 80% cheaper. Worth noting, the cost of generic medications gets even lower with a discount card. GetDealRX, for instance, may offer up to 80% off the price of certain drugs.
Purchase your prescriptions in bulk
In most instances, you’ll find that purchasing medications in bulk will save you some dollars. If you’re on a drug that you’ll be taking consistently, you may ask your doctor to prescribe, let’s say, a 3-month supply instead of one. This way, the overall cost may be significantly lower than if you were to pay a copay for each month.
Keep in mind that there may be a limit on the quantity that you can get at once, depending on your insurance provider’s policies. Also, we don’t recommend going for a bulk supply for a starter pack. In case the drugs have severe side effects, it’s possible to switch to another medication without suffering a huge loss.