21 Incredibly Disturbing Facts About High Prescription Drug Prices
The August 2016 issue of Consumer Reports features an in-depth, multi-prong investigation into why Americans are facing rapidly escalating prescription drug prices—often to the point that patients are risking their health by skipping meds entirely. While there are many factors contributing to higher costs for prescription drugs, according to the report, allow us boil down the main explanation to a single word: GREED.
Specifically, it's the profit-seeking strategies of two industries that get much of the blame for why Americans are experiencing price shock at the pharmacy. "Our analysis suggests that high prices for generic and brand-name drugs stem in part from a battle over profit between mammoth industries—big pharma and insurance companies—with consumers caught in the middle," the CR study reports:
The result of these squabbles is handsome profits for the two industries, as well as painful—and potentially dangerous—costs faced by consumers with medical needs. In theory, our elected officials should be fighting for their constituents by reining in prescription drug prices. But too often, that's not happening, because, well, politicians get a piece of the action too, in the form of hundreds of millions of dollars in lobbying money pouring into Washington from big pharma and insurance companies.
Here's a look at some of the more sickening facts related to the current state of out-of-control prescription drug prices in America:
Double-digit drug price increases have taken place in each of the past three years, including average rises of 12.6% in 2014 and over 10% last year.
Prices increased at eight times the rate of inflation for 30 prescription drugs analyzed by the Wall Street Journal, with an average price hike of 76% from 2010 to 2014.
Read Next: 13 Smart Ways to Save on Prescription Drugs
16.7% of all U.S. health care spending in 2015 went to prescription drugs, compared to roughly 7% in the 1990s.
The average annual retail price of drugs was over $11,000 in 2013 for a patient who has prescriptions for a chronic illness, according to a AARP report. That total was "almost three-quarters of the average Social Security retirement benefit ($15,526)," and nearly half the median income of someone on Medicare ($23,500).
The price of the life-saving drug Daraprim was jacked up 5,000% overnight last fall by the company that purchased it, Turing Pharmaceuticals, and its hated CEO Martin Shkreli. In an instant, the price of a single pill went from $13.50 to $750, and a full bottle that cost $1,700 went up to $75,000.
Shkreli and Turing are hardly alone in their profit-mongering strategy of snatching up the rights to needed drugs before raising prices astronomically. The price of 60 prescription drugs doubled during a recent 12-month span, and prices for 20 of these medications at least quadrupled.
16% That's the average annual price increase over the past 10 years for a drug called Avonex, which treats multiple sclerosis. Demand for the drug has decreased every year over the past decade, yet revenues for the company have more than doubled over this period, to $10 billion in 2014, for its manufacturer, Biogen.
EpiPen prices have increased 450% since 2007, when the self-injected epinephrine syringe system prescribed as a potentially life-saving tool for people with allergies was purchased by the Netherlands-based drug company Mylan. But even that appears to be an underestimate. The retail price of EpiPen, which is sold in packs of two, was about $100 in 2006 without insurance, $249 in 2012, and is now over $600, according to the prescription-price search site GoodRx.com
$94 That's how much one investigative reporter paid for a pack of EpiPens in 2014, when the going price in the U.S. was more like $380. How'd she get such a deal? She drove over the border and bought it in Canada—and the pharmacist there apologized that the price was "extremely expensive" since she didn't have a prescription.
EpiPen profit margins were 55% in 2014, according to a Bloomberg News report, compared to 9% in 2008, and the product accounts for about 40% of Mylan's annual operating profits.
Read Next: This Is Why the U.S. Pays More for Prescription Drugs Than Other Countries
Denmark spends only 35¢ per capita on prescription drugs, and Canada spends 72¢ for every $1 spent in the U.S., according to a 2013 Center for Economic Policy and Research study, which notes, "The reason that other countries spend so much less on prescription drugs is that their governments negotiate prices with the pharmaceutical industry."
Free meals result in more prescriptions. A new study shows that doctors who were treated to four or more meals—most of them worth under $20—from pharmaceutical companies were five and a half times more likely to prescribe name-brand drugs rather than their cheaper generic equivalents.
Prescription drug spending hit $425 billion in the U.S. last year, before discounting, and the total is expected to reach $640 billion by 2020, according to data from IMS Health Incorporated.
The average American worker paid $1,318 out of pocket in medical expenses (including prescriptions) before their health insurance providers began covering part of the bills. That's up from an average deductible of $584 a decade ago for Americans with employer-sponsored health insurance, according to the Kaiser Family Foundation.
20% of Americans who take prescription drugs report that they or a family member have skipped them or cut them in half because the drugs are so expensive.
10% of patients with the blood cancer multiple myeloma said they stopped taking a drug to treat it because it cost too much.
55% of adults ages 50+ who decided not to refill a prescription said that the cost of the drug was one of the reasons for skipping it, according to an AARP survey. Nearly one-third (32%) said cost was "the main reason" for not refilling the prescription.
The largest pharmaceutical companies routinely spend more on marketing and advertising drugs than they do on researching and developing them. For example, "We found that drug company behemoths Johnson & Johnson and Pfizer spent about 13 percent and 16 percent on R&D, respectively," the Consumer Reports study reported. "At the same time, both companies spent about 30 percent of revenue on selling, marketing, and administrative expenses."
Read Next: High-Deductible Health Insurance Plans & 11 Other Things Americans Are Suddenly Buying More Than Ever
73% of Americans say the cost of prescription drugs is unreasonable, and the vast majority (76%) blame greedy pharmaceutical companies as the reason prices are so high.
81% of Americans ages 50 and up say prescription drug prices are too high, and nearly 9 in 10 believe the country's political leaders need to do something about the problem. So why is nothing being done?
The pharmaceutical and health product industry is by far the biggest spender in terms of lobbying American politicians. Some $231 million was spent attempting to influence our elected lawmakers in 2015 alone. Guess what industry came in second place? Yep, insurance companies, to the tune of $157 million last year.