Why Are Prescription Drug Costs Rising, and What Can We Do About It?

Why Are Prescription Drug Costs Rising, and What Can We Do About It?

If you take a prescription medication, you have likely seen it increase in price.  According to the health policy journal Health Affairs, drug cost increases have “far outpaced inflation” and have also “outstripped growth in other medical costs.”  The Mayo Clinic estimated that “the average price of cancer drugs for about a year of therapy increased from $5,000 to $10,000 before 2000, to more than $100,000 by 2012, while the average household income has decreased by about 8% in the past decade.”  This is of course alarming to consumers, providers and payers alike.  So why is this happening?


For one, the federal government does not regulate prices for drugs, unlike many other countries.  For example, in Denmark, where the government negotiates prices with the pharmaceutical industry, about 35 cents is spent for every dollar the U.S. spends on prescription drugs.


In addition, the length of a typical drug patent is shorter in the U.S. than other countries.  This means that new drugs usually will have a monopoly for about a dozen years, and will increase the price of the drug as the patent expiration date gets nearer.


Another issue is lack of competition.  When there are only a few companies making a drug, there is little incentive for them to keep the price low.  This is furthered by the fact that many drugs are made to treat rare conditions affecting a relatively small number of people – new companies have little incentive to enter into such a market.


These are multifaceted issues tied up in economics, policy and health care trends.  As such, the solutions are equally complex.


The Tampa Bay Healthcare Collaborative hosted a forum on May 19 during which experts discussed these issue in detail.  A panel representing the pharmaceutical industry, health care providers, health care payers and consumers discussed how Tampa Bay is impacted, and what the region can do to ensure everyone has access to the medications they need.  The panel was moderated by Mary Shedden, News Director, WUSF and included:


  • Jack McRay, Advocacy Manager, AARP
  • David Pizzo, Florida Blue Market President, West Florida Region
  • Aaron Rigali, Director of Pharmacy, Empath Hospice
  • Tara Ryan, Vice President, State Policy, PhRMA
  • Joe Santini, Director, Community Health Centers of Pinellas


Panelists shared information on the issue of rising drug costs and discussed possible solutions such as:

  • requiring pharmaceutical companies to publicly release information on how they set prices
  • allowing Medicare to negotiate medication prices
  • limiting charges for high-cost drugs
  • allowing people in the United States to buy drugs imported from Canada


The Kaiser Family Foundation found that, in general, Americans favor these actions as ways to prevent extreme rises in prescription medication costs.


Continue learning more about this complex issue in the Tampa Bay Area with the Collaborative’s Advocacy Committee.  And, to stay plugged into this dialogue, and others about local health policy issues, please join the Tampa Bay Healthcare Collaborative’s mailing list.