Pharmaceutical costs have been a point of stress for those in need of prescription drugs since the rise of the industry. This is an issue that leaves many in need out of luck when it comes to getting their medication. What isn’t understood is why the price of medicine is so high. However, there are proposals aimed at helping consumers by offering discount medication plans that could be the antiseptic to the industry sore.
Understanding the Industry
The process of developing a new drug has four basic steps. First, the research is funded, and once the formula has proven effective, a patent is filed. Next, the drug is manufactured and then, finally, marketed. Of these four steps, research and marketing are by far the most costly.
To understand the process, consider an example. In order for a pharmaceutical company to create a formula that effectively reduces pain related to heart disease, they have to spend millions on the first step. As a result, they cannot sell their formula at a low price and turn a profit. The price must be raised, and more pills must be sold, to clear a profit, so marketing is put in place to strengthen sales. However, the marketing costs, in turn, raise the price of the medication. Our heart pills have become justifiably expensive.
Fortunately, there are programs in several states that offer free discount medicine cards without undercutting the profits of the producer. By making deals with drug stores, these RX cards are opening doors for low-income or debt-burdened patients.
The End of the Patent Era
When the aforementioned pain relief pill hit the market, it did so under patent, a costly but legally binding ownership contract. The pharmaceutical owns the formula, meaning that other companies could not use the formula to compete with the patent-holder. Unfortunately for the pharmaceutical industry, patents expire. When they do, off-brand or “generic” discount medicine hits the market at dramatically lower prices, which effectively cuts the original company out of the market.
In fact, the pharmaceutical industry decided back in the 1990s that new formulas are too expensive. Money was no longer dedicated to making new patents, and in recent years, these patents have run out. This creates a struggle for the industry, but its consequences are not entirely negative.