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key words when it comes to the rise of cost of prescription drugs
are drug prices too high
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For the pricing strategies of drugs, the market has seen a trend toward rising prices overall. Part of the rise may be due to the influx of new technology, but overall, the prices are rising at an increasing rate (Chandra). This raises substantial concerns in the health economics community dealing with drug commercialization. Basic microeconomics explains the relationship of supply and demand with the pricings structure of consumer goods. Changes in either supply or demand have an effect on the market or equilibrium price, and a consumer’s decision is majorly based on willingness to pay. Thus, it is necessary to focus on cost reduction to stabilize demand.
A recent case in the market shows the price of a 62-year old drug increasing from $13.50 a tablet to $750 a tablet overnight (Pollack). It treats a parasitic infection for babies, people with compromised immune
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Through insurance plans, the actual cost to the patient can be lower. However, when patients are responsible for a larger portion of the cost, they are less likely to utilize the health care service (Mattingly).
Overall, these insurers are losing out because they have to cover the cost of the drug or fight for a discount (Pollack). Insurers can either raise the cost of their insurance or limit the coverage of their plans using co-pays or raising deductibles. Looking at who is covering the costs for these drugs, if Medicaid is paying, it is a hit to state budgets, and the money is coming out of taxpayer dollars (Pollack). This threatens the fiscal sustainability of healthcare. Overall, the twisted cost structure of drug pricing demonstrates that the rising prices are due to a variety of factors. By focusing on cost minimization, manufacturers should be able to cover cost of research and development while still charging a reasonable price. By focusing efforts on charging prices that are appealing to both consumers and
The Island of Mocha in the video is an example of a traditional economic system evolving into a market system. Every person plays a key role in this traditional system. They had fisherman, coconut collector, melon seller, lumberman, barber, doctor, preacher, brownies seller, and a chief. The Mochans got sick of trading goods all across the island just to get the things that they want or needed. The Chief decided that they would use clam shell for currency instead of trading.
There seems to be no law protecting patients from the price increases that these big pharmaceutical companies are making. Marcia Angell, is an American physician, author, and the first woman to serve as editor-in-chief of the New England Journal of Medicine. In chapter 10 of her book, The Truth About the Drug Companies, she talks about stretching out the idea on monopoly. Patents makes it illegal for a specific set amount of time for competitors to sell the same/similar drugs. Once the patent is over, when the company loses its rights to a drug, the Food and Drug Administration (FDA) arranges for the generic version of the drugs made by a different company to go out on the market. When there is only one generic brand on the market, the cost may not be as cheap because the generic brand and the brand name shadow prices. This keeps the generic version just beneath the price of the brand name. Although the generic is not that much cheaper than the brand name, in the course of one year, the brand name company will lose hundred of millions of dollars due to generic drugs. From an economic point of view,
We the consumer would rather pay less for any product that is needed or want. Ultimately we are the reason for high prices as well as low prices. Prices of products do not always stay the same and more popular products have higher prices than less popular products. These fluctuations, high prices and low prices are from the idea of supply and demand. Supply and demand defines the effect that the availability of a particular product and the desire or demand for that product has on price. Generally, if there is a low supply and a high demand, the price will be high (Investopedia). To understand the idea of supply and demand, the understanding of supply and the understanding of demand must be defined. The Law of Supply states that at higher prices, producers are willing to offer more products for sale than at lower prices, also that the supply increases as prices increase and decreases as prices decrease (Curriculum Link). The Law of Demand states people will buy more of a product at a lower price than at a higher price, if nothing changes, at a lower price, more people can afford to buy more goods and more of an item more frequently, than they can at a higher price and that at lower prices, people tend to buy some goods as a substitute for others more expensive (Curriculum Link). In todays economics these ideas are seen frequently in everyday life. The laws of supply and demand are seen in many ways in the company Apple Inc. Each year Apple Inc unveils a long awaited mobile operating system and IPhone. We can also see many aspects of the law of supply and demand in Nike Inc’s Jordan Brand. Jordan Brand has released a number of...
In America, it has become a battle to earn a high paying job to cope with the expenses of a typical American. It has become even more of a battle for some people to afford medical prescriptions to keep healthy. Health becomes a crucial issue when discussed among people. No matter what, at one point or another, everyone is going to stand as a victim of the pharmaceutical industry. The bottom line is Americans are paying excessive amounts of money for medical prescriptions. Health-Care spending in the U.S. rose a stunning 9.3% in 2002, which is the greatest increase for the past eleven years. (Steele 46) Many pharmaceutical companies are robbing their clients by charging extreme rates for their products.
...ts to cover their mistakes. This is the exact opposite of what the country needs. Why should costs go up because of denied treatment? The big concern is whether or not government really understands the great difficulty in trying to control HMO’s and other health care programs without a nationalized program. Since there are some 6 million people using Medicare in HMO’s something needs to be done to ensure these patients the treatment that they need.
In the business of drug production over the years, there have been astronomical gains in the technology of pharmaceutical drugs. More and more drugs are being made for diseases and viruses each day, and there are many more drugs still undergoing research and testing. These "miracle" drugs are expensive, however, and many Americans cannot afford these prices.
An Examination of Basic Microeconomics: Fundamental prerequisites and integral properties essential to the development and success of independent pharmacies.
There are three issues when it comes to the health care cost rising. The first is the rising cost in prescription drugs. The second area of rising cost is the increased technologies when it comes to the medical industry. The third problem is the aging population. Prescription drugs are the area of the fastest growing health care expense, and it is projected to grow at 20 to 30 percent each year over the next several years. There are many newer, more expensive drugs on the market, and the use of these prescriptions is exploding. In addition, with so much television advertising, many consumers ask their doctors for expensive, brand name drugs when there may actually be a generic drug that works just as well.
Toward the end of the 1990s, health care cost inflation began to decrease slowly after a steep increase in the early part of the decade. The patient population at that time hoped that various policies and programs implemented by government, employers, and insurers in the '90s that were put in place to control costs would continue to moderate the overall increases for the year to come. This was not the case and at this point in time rising health care costs have again become a major issue for patients seeking medical care. During the 2000’s the average annual health insurance premium in the private sector had a dramatic increase to $2,655 for single coverage and $6,772 for family coverage, an increase of 33.3 percent and 36.7 percent, respectively, since 1996, according to new data from the Medical Expenditure Panel Survey, conducted by the Agency for Healthcare Research and Quality (AHRQ, 2000).
If the firm decides to pursue alternative two, Burroughs and Wellcome must construct a new pricing strategy. Some of the firm’s uncertainties consist of the public perception of the company, the implication of the current pricing strategy to revenues, the effect to the bottom line because of the reduction in price, the impact of an introduction of a new product from other competitors in the future, and the unclear outcome on profits due to regulatory constraints.
As the common person may know, drugs are very expensive. Prescription drugs, although still expensive, are one of the cheaper routes to go. However it can also be dangerous, because it’s easier for doctors to notice the abuse. It is said that Americans pay more for prescription drugs than any other country in the world (Brym and Lie). Other routes a drug addicted person can go is through the illegal drug trade, otherwise known as the black market. For example, cocaine can go for around $1500 per kilo in Colombia, which is around two pounds. Often times the price of cocaine in America can go for a retail price of around $66,000. These prices even for just cocaine are what keep the drug cartel’s ...
A single firm or company is a producer, all the producers in the market form and industry, and the people places and consumers that an Industry plans to sell their goods is the market. So supply is simply the amount of goods producers, or an industry is willing to sell at a specific prices in a specific time. Subsequently there is a law of supply that reflects a direct relationship between price and quantity supplied. All else being equal the quantity supplied of an item increases as the price of that item increases. Supply curve represents the relationship between the price of the item and the quantity supplied. The Quantity supplied in a market is just the amount that firms are willing to produce and sell now.
It is the role of every government to safeguard its people in all matters including controlling the economy. Every economy faces different challenges including the business cycles that may emanate from the global market. In this paper we try to examine measures taken by the UK’s coalition government in trying to ensure that the economy benefits every citizen and reduces the overall burden to it. We consider the recent comprehensive review on spending.
Economics is basically the understanding of how different economies function. Economics is the study of how to best allocate scarce resources among competing uses. Scarcity in the economy is the main problem. There are not enough resources to keep up with the demand for them. Within the discipline of economics, there are two areas of study: Micro and Macro Economics.
What is Microeconomics? This question was left unanswered when I initially enrolled in this course. Microeconomics is the social science that studies the implications of individual human actions, specifically about how those decisions affect the utilization and distribution of scarce resources. Microeconomics shows how and why different goods have different values, how individuals create more efficient or more productive decisions, and how individuals best coordinate and cooperate with one another. Microeconomics does not try to explain what should happen in a market, but instead only explains what to expect if certain conditions change. For instance, If the price of the new iPhone 8 is higher than the previous model will the consumer buy it? There are several elements that will play into getting an answer for this question, but gives you a general idea of what microeconomics entails.