Drugs And Your Wallet

For those of us that need to take prescription drugs the skyrocketing costs of them is very burdensome.  Of course, those costs are only one of the problems with our medical system in the U.S.  To examine all those issues and possible fixes would take many pages, so I will limit myself here to just drug costs.

A few months ago a small pharmaceutical company raised the price of one of its drugs by 1700%.  That ridiculous increase was not due to new onerous regulations, nor due to new research and development costs, but only because the could do it and get away with it.  The rapid rise in prescription drug costs is one of the causes of escalating insurance premiums.  It is also a cause of the frequent changes that insurance companies make in their formularies.

Pharmaceutical companies site three factors for the rising costs and as a reason that a ten-year protection is needed before a generic drug can be marketed.  The factors are the very high cost to develop new drugs, the extensive time frame and testing requirements before the FDA will approve a drug for sale, and of course the high risk of exorbitant legal actions.

The potential legal action is probably the easiest to fix.  Pass tort reform legislation.  Not likely to happen anytime soon though as a very high percentage of our legislators are lawyers, many still taking money out of law firms.  The odds of meaningful tort reform is probably akin to term limits and putting themselves into the SS and Medicare systems.  Slim and none and Slim is out-of-town as the old western saying goes.

Will the FDA loosen the onerous requirements to get a new drug approved?  Not likely.  It has more to do with the FDA bureaucracy protecting itself than it does with protecting the public.  History has shown that once a bureaucracy is firmly entrenched it never agrees to self-limit or self-destruct.

Yes, the R & D costs are high.  Chemists don’t come cheap, nor do research labs.  But, having said that one still must wonder why drugs cost so much less in Canada, Panama, and dozens of other countries than in the U.S.

So, take generics you say?  Well, not all drugs have a generic and not all people can take a generic.  Yes, the active ingredient (s) in the generic is supposed to be the same as the original prescription product.  But, many people are allergic to the fillers, binders, and/or coatings used in many generics so taking them can be an exercise similar to Russian Roulette with the losers going to the ER or even the morgue.

However, the reality is that if the pharmaceutical industry doesn’t rein itself in soon, it will be done for them.  There is a long history of government, under pressure from the citizenry, stepping in to break up or regulate companies and industries that fail to do so themselves.

It is unlikely that any heavy hitter in a pharmaceutical company is going to read this piece, nor would they take any action if they did.  The only hope I see is if enough people put enough pressure on their legislators to force a change.  Do you see a better fix?


Ken Vincent
Ken Vincent
KEN is a 46 year veteran hotelier and entrepreneur. Formerly owned two hotels, an advertising agency, a wholesale tour company, a POS company, a leasing company, and a hotel management company. The hotels included chain owned, franchises, and independents. They ranged in type from small luxury inns, to limited service properties, to large convention hotels and resorts. After retiring he authored a book, “So Many Hotels, So Little Time” in which he relates what life is like behind the scenes for a hotel manager. Ken operated more that 100 hotels and resorts in the US and Caribbean and formed eight companies. He is a firm believer that senior management should share their knowledge and experience with the next generation of management.

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  1. In continuation: Mr. Modi had the courage to put checks on the cost of essential drugs and medical devices like stents that used to be out of reach of most of the Indians. He forced the drug companies to reevaluate their pricing strategies, Distributor/Dealer profit margins, and commissions. Not only that, he cut the red tape of rules and regulations to the very minimum, so each participant could benefit in a reasonable fashion. You may call it high-handedness or whatever but the fact remains the same; you need the bitter pill to cure a serious malady.

  2. I enjoyed every word of your deeply analytical article, Dear Ken! You are absolutely right about the vast difference in the cost of prescription drugs in the U.S. vs. other countries like Canada, Panama, and elsewhere. No doubt, tort laws are one of the impediments that cost almost both arms and legs to the needy. In addition, I dare say there is something even more rampant that we hardly ever come to know. The government does not want us to know and the drug companies will never share with their clients: it is the ever-growing nexus. How do the drug manufacturers afford the lavish gifts they bestow upon the doctors in the form of their lavish golf club memberships and foreign junkets in the name of medical conferences? The political donations in the millions that go to every party so none of them would cry foul at a later date. majority of these facts remain hidden from public view but for how long? What is needed here is a leader like the current Indian Prime Minister Mr. Modi. Contd