Disparities in Prescription Drug Pricing

I recently went to have a prescription filled. I had switched insurance companies, and my old pharmacy did not accept my new insurer. I was told my prescription would be $300. Under my old insurer, my copay was $28.

I shopped around and was shocked to find I could fill the prescription for $12. No insurance, no copay, no forms, no cards, $12. It was the exact same drug; both were the generic form of a widely used medication.

Of course, this raises many troubling questions. My first instinct when I heard the $300 price tag was not to fill the prescription. And in fact, had I not found the lower price, that would have been my decision. Unfortunately, I am not alone in considering this option.

The second concern was my realization that I had been overpaying for years, even under my insurance plan. The difference between $28 (the old copay) and $12 is nowhere near the 25x difference between the cost without insurance, but it is still more than double.

I accept that part of this is my fault. When the physician wrote the prescription, he sent it to the pharmacy associated with his medical system. I should have shopped around at that point. Several companies offer discounts on popular medications and have websites that compare prices. But since my insurance covered most of the cost, I did what many people do and accepted the default provider. This was laziness on my part.

However, there is a systematic problem in the United States. Pharmaceutical prices in the United States are higher than anywhere else in the world. On average, they are two and a half times higher, and the difference is increasing. Americans spend more per capita than any other country.

The increase spending on pharmaceuticals does not result in better health outcomes. The United States has the shortest life expectancy of any other developed country. Three years less than Great Briton, four years less than Canada, five years less than France, and seven years less than Japan.

The United States also falls short on other measures when compared to developed countries. For example, it has the highest number of avoidable deaths, the highest rate of infant and maternal deaths, and U.S. patients are more likely to suffer from multiple chronic conditions.

It is fair to say that the increase in cost does not improve our overall health.

I strongly believe in open and free markets. They have been shown to drive down prices and benefit the consumers. So why does it not work with prescription drugs? The most straightforward answer is pharmaceuticals are not operating in a genuinely open and free market. Anytime you have a twenty-five times price difference, markets are inefficient.

Many reasons have been cited, with transparency being high on the list. Unfortunately, there is a tangled mess of behind the scene deals involving pharmaceutical companies, pharmacies, and health care providers. And with the money involved, there is little incentive to simplify the process.

With so many citizens affected, you would hope politicians would step in, sort through the mess, and set reasonable regulations to ensure their constituents have the information needed to make informed decisions. However, this problem has existed for decades, and matters have continued to worsen.

A skeptic may think that politicians are more interested in fundraisers. After all, pharmaceutical companies make large political donations. Not to mention many other perks. The proof is in the inaction that has spanned multiple administrations by both parties.

Ultimately, it is up to us to check and double-check prices. The information is not easy to find, but it is there.