How Big Pharma Controls Medication Costs and Availability

Big Pharma Calls the Shots in MedicineBig Pharma has more control over how medicine is practiced in the United States than most of us probably realize. The big pharmaceutical companies have deep pockets – filled by American consumers – and big muscles to exert extreme influence over what gets manufactured (patented or generic medications), how much those medications cost, and how often those medications get prescribed.

Big Pharma has also found back channel ways to keep generic forms, which are less costly, of their patented medications off the market longer and to keep the high prices of those patented medications.

As the end of the exclusive right to be the sole manufacturer of patented medication with no competition nears – 12 years in the United States – on popular medications, pharmaceutical companies begin the race to create generic prescription versions of those medications. The cost to make generic prescription drugs is much less, because the formula is already available and there is no investment cost to develop the medication.

Eventually, many generic prescription medications transition to being available over the counter without a prescription.

There is a lot of money being made, no matter how the medications end up being sold, but the most money can be made on patented prescription medications.

Because of that, the pharmaceutical companies can – and do – charge whatever they want for the medications they hold patents for and the consumer often ends up bearing the brunt of the cost as insurance companies refuse to pay the full cost, or as in the case with Medicare Part D, they don’t pay anything at all while senior citizens are in the “donut hole.”

One of the angles that Big Pharma is using to make more money is that they are creating new, patented medications that combine generic and/or over-the-counter (OTC) medications, which if purchased in their separate generic and/or over-the-counter forms wouldn’t cost very much (compared to the patented medication cost).

An example is Horizon Pharma’s patented pain relief medication, Duexis. Duexis combines two older generic forms of Motrin and Pepcid.

The cost for buying the generic forms of Motrin and Pepcid (over-the-counter) separately for a month would probably be less than $50. Duexis, on the other hand, is $1500 for a month’s prescription.

Since there are generic, over-the-counter forms of Motrin and Pepsid (which insurance doesn’t have to pay for), insurance companies, understandably, don’t want to pay for Duexin.

Paradoxically, though, the sales of Duexin are accelerating rapidly.

How and why?

It turns out Horizon Pharma has joined the trend among pharmaceutical companies to partner with a mail-order specialty pharmacy to ostensibly make filling prescriptions easier for everyone.

Doctors are encouraged (they get reimbursed when they prescribe Duexis or any other patented medication) to submit prescriptions directly to the specialty pharmacy instead of sending the patient to the corner drug store with the prescription.

The pharmacy reimburses doctors and mails the medication to the patient and it deals with getting paid by the insurance companies, most of the time very successfully.

The problem for patients who use Duexis – and any other patented medications – is that their insurance costs and deductibles will increase because of the high cost of Duexis (in many parts of the United States, $1500 is in the higher range of a monthly mortgage payment), so the patients end up paying more on the back end.

Under the table deals between pharmaceutical companiesAnother way that pharmaceutical companies are controlling the price and the availability of prescription medications is to pay competitors – known as reverse settlement payments or pay-to-delay deals – to not create generic versions of their patented medications when the company’s 12-year exclusive rights to manufacture the medication ends.

This has become a common practice in the pharmaceutical industry, where everybody winks and turns a blind eye to the practice, and the courts seem to be unable to find anything illegal about the monopolistic effect of this for consumers who have no options but the original patented medication and who end up paying whatever the pharmaceutical company wants to charge for it.

A third way that pharmaceutical companies control what kinds of prescription medications are available as well as the prices is by both generating a consumer demand for the prescription big-pharma-pay-medical-providers-to-prescribe-medicationsmedications (prescription medications rival cars in paid advertising in all form of media) and by giving incentives – monetary and non-monetary – to medical providers to prescribe their medications.

Essentially, this amounts to the pharmaceutical companies creating the market from both sides of the equation for their medications. Not only is this also illegal, but, once again, consumers – you and me – end up carrying the financial brunt of this well-entrenched system in American healthcare.

Most profoundly affected – and what makes the injustice of this burn inside me – by these practices are are also the most vulnerable, healthwise, in our society: the elderly (with and without dementias) and the chronically-ill (diabetes, hypertension, and many neurological and autoimmune diseases).

These two groups of people, then, are often left with the black and white choice of whether to go broke (and lose everything, in some cases) to treat their health problems or to forego treatment altogether to try to stay financially solvent and hang on to what little they have.

This is pure greed, which is why these pharmaceutical companies are in business. They don’t care about the health of anyone. All they care about is a nice, fat bottom line and big payouts to their shareholders and to their executives.

And they have the control, so they can do whatever they want and you and I, either for ourselves or for our loved ones, have to make the choice to dance with them or not.


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