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Chris Cizmeciyan
Jun 30, 20224 min read

Monopolistic Prescription Drug Price Practices

The perverse increased cost of prescription drugs in the United States by drug manufacturers harms people, especially when they are most vulnerable. Three parties influence prescription drug pricing and spending: the public, the healthcare insurers, and the government. Insurance companies are unique because they have pharmacy benefit managers (PBMs), who negotiate the list prices – the full prices before insurance discounts – of drugs from drug manufacturers to make prescriptions cheaper for insurance holders. Since PBMs can keep these rebates, the Department of Health and Human Services predicted that there would be a substantial increase in list prices over time. However, the 159% increase from 2007 to 2018 was unprecedented. These increased costs for customers disproportionately affect those without insurance, who primarily consist of minority populations and low-income Americans, who must pay exorbitant list prices out of pocket.[1]


Though inflation contributes to price changes, the costs of half of all retail prescription drugs and nearly half of all drugs administered by physicians covered by Medicare have surpassed the national 1% rate of inflation.


The list prices of 23 of the 25 Top-Spending drugs outpaced inflation in 2020. Notably, some of these medications treat chronic illnesses and are often used in multiple rounds of treatment intervention. Insurers and drug companies exploit this need by having medication costs cover only a certain dosage. This multiplies the small price hike, causing substantial expenditures for the patients. Among these medications are Eliquis, a blood thinner used by 2.6 million people; Revlimid, a multiple myeloma treatment used by 44,000 people; and Keytruda, a cancer treatment utilized by 59,000 people. In the case of Keyrtruda, a 3.3% increase per dosage led to an additional expenditure of nearly $750 per claim and an average spending increase of $6000 per patient.[2]


In the case of cancer, patients do not have the liberty to choose whether to take a certain drug, and since most cancer patients undergo similar treatments, drug manufacturers raise prices because demand will always be high. Moreover, although innovative therapies and improved standards of care for patients are imperative, drugs that have gone out of patent are neglected despite the opportunity for generic competitors to mass produce them.[3]


Disparities experienced by minorities with medication accessibility and healthcare quality are consequences of upstream and downstream neglect. For example, an upstream influence such as health care policy could influence medication accessibility and purchasing power, which are downstream results. Chronic illness like asthma, obesity, HIV/AIDS, and hypertension disproportionately affect people of color due to an array of factors such as education, discriminatory redlining, and affordability of nutritious diets. The combination of poor upstream and downstream factors, such as insufficient quality of care, is exacerbated by how minorities are more likely to be uninsured and therefore are the most affected by increasing list prices.[4] While out-of-pocket costs for Americans has halved in the last 30 years, respectively nearly 14.4% and 24.9% of the Black and Hispanic/Latinx populations without health insurance today must pay list price for the same medications that White populations buy for lower prices as insurance holders.[5] As a result, Black and Hispanic/Latinx patients used 10-40% fewer medications than White patients for the same illnesses.[4] Both historical and modern exploitation of minorities in the medical sector – such as the Tuskegee Syphilis Experiments performed on Black men – and modern implicit biases against racial and ethnic minorities severely decrease quality and reception of care, respectively, by medical practitioners and patients.[6]


Unregulated monopolies that control the supply and costs of drugs that threaten people’s lives with no consequence are disastrous. Nonetheless, diverse regulations can make prescription drug accessibility equal and equitable. Currently, corporations utilize their lobbying power to oppose nationwide price caps on drugs, such as insulin and asthma medication to maintain profits; increase rebates for PBMs; and still have their products covered by a majority of insurance plans.[3] Despite lobbying attempts, one entity in the United States can control the pricing and spending on drug development and change the landscape of the healthcare industry for good – the government. By enacting nationwide price caps that expand current statewide ones, such as the $35 monthly cap on insulin in Minnesota, medications can be increasingly more accessible, especially for those without insurance.[4] Investing in National Institute of Health (NIH) sponsored research can spur innovation while continuing to support drug manufacturer research and development spending.


Historically, NIH contributions have had a significant impact on modern cancer and HIV treatments. Continued funding of research on these diseases and stimulating cardiovascular disease and asthma research could increasingly help minority populations.[7] By improving cultural competency and rebuilding trust through advocacy by members of these communities, the United States can begin to eliminate implicit biases in the medical field. This systemic change could significantly ameliorate the care that people of color in the United States receive while beginning to amend historical strains.


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