What’s Behind the Soaring Costs of Prescription Drugs in the US?


Healthcare is a basic human right. As much as possible, everyone should be able to access and afford it wherever and whenever they need it. Unfortunately, that is not always the case. The high prices of medicines continue to burden low-and-middle-income Americans, especially those who rely on maintenance medications.


Among all developed countries, the US pays the highest prices for prescription drugs. Although there have been proposals to reduce their costs, there’s still not enough consensus to make such significant changes.

But what’s behind the soaring costs of prescription drugs in the US? Several factors may come into play, and we’ve highlighted a few of them in this article.

Prescription Drugs in the US


Research and Development

The development of a drug is an extensive process. From preclinical testing, it might take around 12 years for a drug to be finally approved. Add up to that the cost of developing a drug, which is approximately $2 billion, with only 10-20% of drugs tested that succeed and reach the market.


The sale of medicines provides pharmaceutical companies with the resources to invest in future research and development. Thus, high prices are inevitable to fund the expensive development of new drugs. However, not everyone agrees with this.

Others view it deceptive to defend high drug prices for a high cost of drug development. Because a significant amount of public funding is placed into the innovation of new drugs, the general public has the right to access prescription drugs that are reasonably priced.

Existence of Monopoly

A monopoly is considered the most significant factor that drives the high cost of prescription drugs in the US. And it is the effect of the patent system that permits drug makers to be the sole manufacturer of patented drugs for 20 years or even more.

Due to patents, such medications are protected against generic competitors. Supposedly, monopolies are only temporary as generic competition must surface when the patents expire. However, a drug with an expired patent would no longer be the standard of care, and an improved version with a new patent life comes out.

Because of existing government-protected monopoly rights, drug manufacturers continue to control the given market and increase prices without competition.


No Negotiation of Prices

Unlike other countries with national health programs, drug manufacturers in the US set their own prescription drug prices. There are no government entities that negotiate drug prices or make the decision not to include drugs with excessive prices.

In fact, the current Medicare Laws limit or do not permit Medicare to negotiate prescription drug prices. Because of the absence of negotiation, drug manufacturers have the freedom to demand any price point that they can obtain.

Severity of Diseases

Medications for severe illnesses are not considered luxury items. Because they are needed by vulnerable patients who want to make their quality of life better and longer, high prices for such prescription drugs are sustained. Drug companies know that patients with serious diseases are inclined to pay any cost to save or prolong their lives.

Lack of Transparency

The large part of the problem with the soaring costs of prescription drugs is the lack of transparency in prices. Consumers or patients never know how much drugs actually cost. The current rebate system doesn’t provide consumers with essential information to make an informed decision when purchasing medication.

But it’s worth noting that the pharmacy benefit management companies have provided such rebates as a disguise to push the cost of drugs higher to earn greater commissions. Although some drug companies tried to justify that rebates also increased along with the drug prices, the research found that they are generally making drugs more expensive.


What Options Do You Have?

Patients and consumers might still have to bear with the US’ current healthcare system while hoping for the numerous proposals released by policymakers to work and make the much-needed change.

But while the issues regarding the high prices of prescription drugs are not yet resolved, it wouldn’t hurt to avail for any prescription discount when purchasing your medication. After all, the discount would still be a better option than the actual cost. It would still help you save money in the long run.


Prescription drugs are a vital component in the healthcare system, and their soaring costs are a significant problem for many Americans. And as consumers, we have the right to demand reasonably priced prescription drugs. But to resolve the problem, lawmakers, insurance, and pharmaceutical companies need to be on the same page. Else, we would continue to suffer from high drug prices and a declining healthcare system.

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