Increased Cost of Prescription Drugs in United States

Q1. Which factors have contributed most to the increase in drug expenditure?
One notable healthcare trend in recent years has been the steady climb in drug expenditures. Improvements in technology and the aging of the population are two commonly-cited factors, as the population is living longer, has a higher rate of chronic health conditions such as heart disease and diabetes, and suffers multiple comorbid health conditions, pharmaceutical companies have risen to the challenge (and profited tremendously) from these concurrent developments. According to La Fleur, Fish, & Brixner (2008), during the years 1996-2000, “the average number of prescriptions per person also rose—from 7.3 to 10.4.1” (par. 5). But this alone cannot explain the increase, and there was also a significant increase (14%) in the amount of money pharmaceutical companies spent advertising to consumers, particularly older consumers (La Fleur, et al., 2008).
Prices for drugs have themselves increased, much more so in recent decades than in the past. For example, from 1994-2005, drug prices increased 8.3% annually, triple the rate of inflation (La Fleur, et al., 2008). This has generated a great deal of criticism of the pharmaceutical industry, given that a lack of regulation and the monopolistic control of a handful of powerful drug conglomerates over the US patent system has enabled such companies to charge often-exorbitant prices. “Even though brand-name drugs account for only 10 percent of the prescription drug market, spending on such drugs account for almost 80 percent of total prescription drug costs” (“Where Are Prescription Drug Prices Rising,” 2019, par.4). As the pandemic has made the economy even more dependent than ever before upon pharmaceutical companies to offer treatment and research, this monopoly and escalating costs will become more concerning, given the control these organizations have over the healthcare industry in the US.
References
La Fleur, J., Fish, L, & Brixner, D. I. (2008). Trends in pharmaceutical expenditures: The impact on drug benefit design. American Health & Drug Benefits, 1(4), 29–34. Retrieved from: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4106630/
Why are prescription drug prices rising and how to they affect the US fiscal outlook? (2019). Peter G. Peterson Foundation. Retrieved from: https://www.pgpf.org/blog/2019/11/why- are-prescription-drug-prices-rising-and-how-do-they-affect-the-us-fiscal-outlook