Many Americans look to online pharmacies for cheaper prices on their meds. This is a trend which doesn’t appear to be changing any time soon in 2019.
Earlier this year, the FDA issued a warning about purchasing pills from a Canadian pharmacy which was used to supply meds to employees of several state governments. The Canadian business was supplying drugs from pharmacies in Canada, the UK and Australia to get the government employees discounted meds.
But why are the prices of drugs so high in the US and why doesn’t the American government seem to do anything to change the situation?
We take a look at the reasons why the government acts the way it does and why it doesn’t seem to want to make things better for patients put at risk thanks to high prices.
Drug Pricing in the US
Compared to the rest of the world the prices patients pay for pharmaceutical prices in America are far higher than in other developed countries. Take the example of the cancer drug Avastin. In the US it costs nearly $4,000 while in the UK it costs less than $400.
This situation has led to millions of Americans taking advantage of lower prices from foreign online pharmacies. These purchases are considered by the FDA as foreign unapproved drugs which are illegal to buy under federal law. Despite this, it is fairly rare for customs to confiscate an order as it enters the US postal system.
The big drugs companies would have you believe that all meds purchased from foreign pharmacies are the same as counterfeit pills. Suggesting that you are putting your health at real risk if you choose to purchase from cheaper suppliers online. While there is some truth in this, with a large number of scam drugstores operating online, there are plenty of legit foreign pharmacies as well.
Why are Drugs Cheaper in Other Countries?
When you purchase in bulk you normally expect larger discounts per item. This is true when you purchase cans of soda at a convenience store and it is also true when you buy drugs from pharmaceutical companies.
The problem is that in the US large group discounts aren’t being achieved in the same way as they are in European countries and elsewhere. Countries which receive cheaper drugs pricing do so because they negotiate medical purchases for the whole country, in the US this doesn’t happen. Drugs companies are allowed to charge whatever they like in America, so they increase their prices to the maximum they believe the market will accept.
These other countries also evaluate the pills to make sure that they have a greater benefit over existing treatments. This doesn’t happen in the US either, the FDA only assesses that the meds are safe and effective and authorize them onto the market based on that. They don’t evaluate if they provide any added benefit to justify the increased costs involved in new treatments.
This does lead to a greater variety of treatments available to US citizens, even if the drugs aren’t statistically producing better results. In other countries, these drugs simply aren’t available and they instead rely on older and cheaper treatments which have similar effectiveness.
The system used in other countries is a benefit of a socialized medicine system, but similar ways of operating do happen in the US as well. The VA, for example, negotiates with drugs companies and gets far larger discounts as a consequence. The Veterans Health Administration gets drugs which are around 40% cheaper than what is paid by Medicare.
There are a few reasons why the situation is the way it is in the US, besides the healthcare system not being a socialized organization.
Businesses spend big money on commercial advertising, though most people don’t believe that they are influenced in their purchasing decisions by adverts. Businesses exist for the purpose of generating profits for the owners and wouldn’t spend money on adverts unless it worked.
Some people seem to think that political lobbying doesn’t make any difference to the decisions that politicians make either. Big business spends millions on lobbying firms for the reason that it works, they wouldn’t do it otherwise. Big pharma is no exception to this lobbying phenomenon, in fact, they take the lead spending more than other industries.
Large pharmaceutical companies hire lobbyists and fund trade organizations who also employ more lobbyists. Two of these trade organizations are the Biotechnology Innovation Organization and the Pharmaceutical Research and Manufacturers of America (PhRMA). Between these vested interests, they lobbied for and against over 1,600 different pieces of legislation from 1998 and 2004. Spending in this time some $900 million, a sum which is higher than any other type of industry over that period.
In the same time frame, nearly $90 million was donated to political parties and candidates. Research has also revealed that in the period between January 2005 and June 2006 some $182 million was spent by big pharma on lobbying. Figures suggest that the industry currently employs more than 2 lobbyists for every politician in Washington DC.
This seems to be the most recent information on the subject and we can only guess at the current level of spending. But what have they received for their lobbying spending?
In 2003, the Medicare Prescription Drug Improvement and Modernization Act was passed. This act prevents the government from negotiating with pharmaceutical companies over the prices of meds. This was clearly a big win for the pharmaceutical industry and means that pharmacy benefit managers are left to negotiate discounts instead.
Naturally, this means that prices through Medicare are higher than they would otherwise have been and that big pharma’s profits are larger as a consequence.
The Federal Drug Administration oversees the regulation and approval of new drugs to the American market so you would hope that they were impartial. However, when 9 out of the last 10 former commissioners of the agency have gone on to hold, often significant, roles in big pharmaceutical businesses, you can be forgiven for being skeptical.
If it seems like there is a revolving door between the head position of the FDA and major pharmaceutical companies, how can they really be impartial? There isn’t anything illegal about the head of the FDA moving to a place on the board of a pharmaceutical company, but it doesn’t look very good.
It is difficult to prove any impropriety or collusion for commissioners to win a future well-paid job with a drugs company, but sometimes things don’t exactly look good.
Take, for example, the case of Scott Gottlieb, commissioner of the FDA from 2017 to 2019 and now a member of the board of Pfizer. One of the initiatives driven through by Gottlieb was to make the approval of biosimilar drugs, which are used to treat certain types of cancer and autoimmune illnesses, more straightforward and fast. The company where he now has a seat on the board manufactures four different biosimilar drugs. Now, this could just be a coincidence, of course, but the suspicion doesn’t look favorably on such a conflict of interests and lucrative salaries offered by big pharma.
Risks of Lower Drug Pricing
If the prices of drugs were reduced in the US, that would be good, right? It would mean that far more sick people would have access to the pills they need and people wouldn’t have to choose between bankruptcy and getting well.
The situation may, however, not be quite as simple as that. If the drugs companies make less money, that means they will be less willing to invest money in new treatments which could bring real health benefits.
There is a clear correlation between demand within the US system and research spending. For instance, when Medicare began to pay for the flu vaccination for the millions of people within their system, the number of clinical trials doubled for new flu vaccines. Since the drug companies knew that they were almost guaranteed to profit from such research they were happy to invest.
This situation does mean that the American consumer is paying the cost for drug development which benefits people the world over. This seems rather unfair but it seems unlikely to change any time soon. It does seem clear that many of the meds developed aren’t a great improvement over what is already available, however, even if they are approved by the FDA.
Purchasing meds from pharmacies outside of the US will be cheaper and can be safe too. It does present some genuine risks and you need to make sure you are dealing with a reliable and legitimate business to make sure you don’t get counterfeit or low-quality drugs. The situation isn’t as bad as the FDA or the pharmaceutical companies may want you to believe, however.
We have highlighted some of the reasons why the US government doesn’t seem to want to reduce costs, and it is difficult to see how the situation can greatly improve without a significant change to the way politics works in Washington DC. Political funding methods and practice would have to change in order for the system to not be corrupted by special interests. But while you wait around for that to change, if it ever will, discounts on meds are available from online stores based outside of the US.