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Human Rights Research Center
May 144 min read

The Medicinal Oligarchy in the United States

May 14, 2024



There is a financial burden to needing lifesaving drugs for chronic conditions, such as epilepsy or type 1 diabetes. The cost of manufacturing these drugs isn't inherently expensive; however, pharmaceutical companies inflate the prices, making them financially unattainable. As pharmaceutical companies overcharge for medications, they should devote surplus funds to research novel drugs but fail to do so. It is a human rights violation that pharmaceutical companies are treating lifesaving drugs as a competitive market when in fact it is an oligarchy, and they don’t use their excess profits to research novel therapies.


The prices of pharmaceutical drugs in the U.S. have continuously risen to become more unaffordable with time. The Affordable Care Act (ACA) aimed to lower drug costs, yet for the uninsured, the out-of-pocket cost of insulin has risen from $1,678 per person per year pre-ACA to $2,800 per person per year post-ACA (Lin, 2023). The ACA isn’t doing enough to lower the cost of medications and many individuals have to obtain their medications using alternative methods, such as traveling to another country to acquire them. The average annual insulin cost for American individuals is $3,490 compared to $725 for Canadians, with an average price increase of 10.3% compared to 0.01% respectively during the study period (Schneider, 2022). There needs to be regulations on the amount that pharmaceutical companies in the U.S. can charge for these medications.


The increasing cost of insulin over time may be due to the shift of manufacturing insulin using human insulins and analogs, price increases for available insulins, prescribing practices, policies that limit price negotiation, and a lack of transparency involving discounts (McEwen, 2017). While there isn’t much that can be done about some of these issues, fixing policies that limit price negotiation and mandating transparency of available discounts could help limit rising insulin prices. Additionally, adding regulations to control the amount that companies can charge for drugs would help lower rising costs. For example, federal regulations that require pharmaceutical companies to submit cost effectiveness and/or comparative effectiveness data may help Medicare cover these drugs, which has worked for other countries (Rao, 2022). The German healthcare system recently implemented a centralized process of clinical assessment and price negotiations for novel drugs which caused the ratio of U.S. to German prices for 80 drugs to climb from 1.3 in 2011 to 1.6 in 2018 (Berkemeimer, 2019). Utilizing some methods used by other countries could help control the prices of drugs on the market to be more affordable to U.S. citizens.


While pharmaceutical companies prioritize maximizing profits, much of the excess funds are not allocated to benefit consumers. Medical marketing expenditure in the U.S has increased from $17.7 billion in 1997 to $29.9 billion in 2016 (Schwartz, 2019). This is important because this money could otherwise be used for researching new drugs and therapies. Approximately 40% of individuals with epilepsy are resistant to current medications, severely limiting their options, yet U.S. pharmaceutical companies are not investing in new treatment options (Ioannou, 2022). Without new drugs being made, patients who can’t use current therapies are suffering. 75% of the most innovative drugs were funded by the National Institutes of Health (NIH), whereas drug companies have spent more money slightly altering existing drugs (Mazzucato, 2015). Taxpayers are funding the NIH, whereas pharmaceutical companies are using their profits for alternative reasons because slightly changing current drugs is significantly cheaper than formulating new drugs.


American citizens with chronic conditions often struggle to afford necessary medications, while pharmaceutical companies prioritize profit over researching new drugs. The pharmaceutical companies manufacturing these drugs have maximized their profits and typically do not use the excess money to research new drugs. This is problematic, as current treatments are not beneficial for everyone and we should be manufacturing new ones. The U.S. should adopt similar policies to other countries to determine how the federal government can best regulate prices of drugs. As it currently stands, it is a human rights violation that people cannot afford excessively priced drugs on the market.


 

Glossary


  1. The Affordable Care Act: Provides subsidies that lower costs for those whose income is between 100% and 400% of the federal poverty level. 

  2. Insulin: A hormone that regulates glucose levels and is the cause of a form of diabetes.

  3. Oligarchy: A small group of individuals controlling an institution.

  4. Out-of-pocket costs: Money that is not covered by insurance for a medical expense.

  5. Pharmaceutical company: Related to the pharmacy and the manufacturing of medicinal drugs.


 

Sources


  1. Berkemeier F, Whaley C, Robinson JC. Increasing Divergence in Drug Prices Between the United States and Germany After Implementation of Comparative Effectiveness Analysis and Collective Price Negotiations. J Manag Care Spec Pharm. 2019 Dec;25(12):1310-1317. doi: 10.18553/jmcp.2019.25.12.1310. PMID: 31778624; PMCID: PMC10397913. https://www.jmcp.org/doi/10.18553/jmcp.2019.25.12.1310?url_ver=Z39.88-2003&rfr_id=ori:rid:crossref.org&rfr_dat=cr_pub%20%200pubmed 

  2. Ioannou P, Foster DL, Sander JW, Dupont S, Gil-Nagel A, Drogon O'Flaherty E, Alvarez-Baron E, Medjedovic J. The burden of epilepsy and unmet need in people with focal seizures. Brain Behav. 2022 Sep;12(9):e2589. doi: 10.1002/brb3.2589. Epub 2022 Aug 26. PMID: 36017757; PMCID: PMC9480957. https://onlinelibrary.wiley.com/doi/10.1002/brb3.2589 

  3. Lin Y, Shao H, Fonseca V, Shi L. Exacerbation of financial burden of insulin and overall glucose-lowing medications among uninsured population with diabetes. J Diabetes. 2023 Mar;15(3):215-223. doi: 10.1111/1753-0407.13360. Epub 2023 Feb 7. PMID: 36751859; PMCID: PMC10036254. https://onlinelibrary.wiley.com/doi/10.1111/1753-0407.13360 

  4. Mariana Mazzucato, “Op-Ed: How taxpayers prop up Big Pharma, and how to cap that,” The Los Angeles Times, 2015 Oct, 27. https://www.latimes.com/opinion/op-ed/la-oe-1027-mazzucato-big-pharma-prices-20151027-story.html.

  5. McEwen LN, Casagrande SS, Kuo S, Herman WH. Why Are Diabetes Medications So Expensive and What Can Be Done to Control Their Cost? Curr Diab Rep. 2017 Sep;17(9):71. doi: 10.1007/s11892-017-0893-0. PMID: 28741264. https://link.springer.com/article/10.1007/s11892-017-0893-0 

  6. Rao P, Fischer SH, Vaiana ME, Taylor EA. Barriers to Price and Quality Transparency in Health Care Markets. Rand Health Q. 2022 Jun 30;9(3):1. PMID: 35837511; PMCID: PMC9242565. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9242565/ 

  7. Schneider T, Gomes T, Hayes KN, Suda KJ, Tadrous M. Comparisons of Insulin Spending and Price Between Canada and the United States. Mayo Clin Proc. 2022 Mar;97(3):573-578. doi: 10.1016/j.mayocp.2021.11.028. Epub 2022 Feb 5. PMID: 35135692. https://www.mayoclinicproceedings.org/article/S0025-6196(21)00883-1/abstract 

  8. Schwartz LM, Woloshin S. Medical Marketing in the United States, 1997-2016. JAMA. 2019 Jan 1;321(1):80-96. doi: 10.1001/jama.2018.19320. PMID: 30620375. https://jamanetwork.com/journals/jama/fullarticle/2720029 

  9. Szaflarski M, Wolfe JD, Tobias JGS, Mohamed I, Szaflarski JP. Poverty, insurance, and region as predictors of epilepsy treatment among US adults. Epilepsy Behav. 2020 Jun;107:107050. doi: 10.1016/j.yebeh.2020.107050. Epub 2020 Apr 12. PMID: 32294594; PMCID: PMC7242147.https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7242147/ 

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