I’ve been reading more about prescription drug prices lately: How they are set; why many are so high, especially in the United States; and what can be done to reduce the costs.
It’s not like I take a lot of drugs — just one prescription — but thinking about future medical costs, availability and health care specialists goes along with being a senior citizen. Much like grab bars in the shower.
Escalating prescription drug prices far exceed inflation. If you didn’t have heartburn before seeing the price, you will soon — and that requires another prescription.
The most expensive drugs tend to be the newer ones, the pills or injections or infusions that treat a terrible disease or illness which afflicts a small number of people. The pharmaceutical companies say they have to recover their costs for research, clinical trials and development. Divide all those billions by a small market of potential customers and the treatments can exceed six figures a year.
No argument that the companies need to recover their costs and make a profit, but their self-awarded gains are painful to see. The world’s Top 10 major pharmaceutical manufacturers took in more than half-a-trillion dollars of revenue last year. The five largest U.S. companies earned almost $82 billion in profits. The pills they make might be small, but the public has a hard time swallowing the big profit numbers.
What really got me thinking about all this was a statement by a Pfizer spokesperson in a recent Wall Street Journal article about drug pricing. The company official explained that Pfizer considers the value of the drugs to patients when setting prices.
Other pharmaceutical companies have explained in similar terms that they often consider not just how much it costs to develop and produce the drug but also how much it will improve a patient’s quality of life or even extend that life. They assign a value to that “better life” and add it to the price of the pill.
The companies also calculate what the market will bear and then go out and advertise the new drugs to build demand. There are more pharmaceutical commercials on TV and streaming services these days than for beer, pickup trucks and air fresheners. At least the 2024 presidential election will crowd out the ads for prescription drugs, though political campaigns are an acute illness all their own.
Always looking to make fun of things I don’t like, such as over-priced drugs from over-profiting companies, I thought: What if everything were priced not on the basis of what it cost to produce, but on how much it makes us happier or healthier?
Ice grippers would be priced at the value of avoiding orthopedic surgery for that broken wrist you will not suffer in a winter fall.
Red wine would cost more because it’s supposedly healthier than white wine.
Automakers would calculate how much you will enjoy that new car for the next 10 years and add it to the sales price. No refunds if it breaks down.
The price for an engine overhaul on your boat would be based on the value of another year of fishing, not parts and labor.
Skim and 2% milk would cost more than whole milk because they’re healthier for us.
Of course, none of this will happen. But even thinking about drug pricing gives me a headache. I hope it doesn’t get so bad that I need a prescription.
Larry Persily is a longtime Alaska journalist, with breaks for federal, state and municipal public policy work in Alaska and Washington, D.C. He lives in Anchorage and is the publisher of the Wrangell Sentinel weekly newspaper.