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Why Do Prescription Drug Prices Keep Rising?

It is no surprise that prescription drug prices are incredibly expensive and many people have trouble affording these medications which they require monthly. Increased drug pricing can spell disaster for providers who lose business if patient’s have poor adherance to prescriptions their doctors have offered them.

One way to combat this is to offer as many generic medications for purchase. If you read our last post, we discussed how many generic medications are cheaper than their brand name counterparts and offer up the same effectiveness.

Unfortunately, this is not a solution for everyone. There are many medications that do not yet have a generic version. This translates to very steep costs as drug manufacturers already keep the cost of the drug high to recoup as much of their losses for developing the drug in the first place. Once the patent runs out, a generic version can be made, but until then manufacturers would like to make as much as possible.

However, that alone does not explain why prescription drug prices keep rising.

Why Are Prescription Drugs So Expensive?

Healthcare spending is inextricably linked to the cost of prescription medications. For many Americans who rely on these various medications to treat chronic conditions, it presents itself as a serious consideration into their budget where the choice between making rent, paying bills can supersede the medical care they require and deserve. A great example is insulin, a wholly necessary drug for type 1 diabetics to live, has almost quadrupled in price.

An important thing to consider with many of these price increases is the fact that it far outpaces anything like inflation or changes in industry, changes in production and manufacturing, etc. So what’s the reason for the increases?

1 – No Competition For Drug Companies

As we mentioned, many brand name prescription medications are patent protected for many years before a generic competitor can enter the market. Just because a patent expires, does not mean the company just gives away their research. There is also many underhanded tactics and lobbying that independent drug manufacturers have done to prevent other companies from cutting in.

2 – PBM’s Are Just a Part of the System

Ordinarily competition drives down prices, and the pharmaceuticals market is fiercely competitive, so what’s the deal? Well, many of these benefits are simply not being conferred down to the consumer level. Prices for drugs go up, but the discounts go to the PBM’s through rebates and other forms of compensation.

PBM’s sometimes get a bad rap because of the often large rebates they receive from drug companies, but their purchasing power which allots them those rebates is also what allows them to negotiate lower prices for drugs.

One of the reasons A-S Medication’s dispensing solutions are so valued by our clients is that we confer these benefits all the way down the supply chain to you, the provider, who can then reduce or eliminate costs for your customers—no matter which type of pharmacy you are operating.

3 – Drug Prices Have Limited Regulation

Imagine how your patients feel when looking at prices for drugs they’ve been told they need.

Your eyeballs would pop out of your head if the prices of vacuum cleaners increased 5-10x their amount from a decade ago. What’s in it? How can it cost so much if the features have largely remained the same? We intuitively understand that there is a huge gap between what is feasibly costs to manufacture the vacuum vs what we are being asked to pay for it. However, with prescription medications, it’s not entirely clear what they cost to make and if the prices are justified.

This lack of transparency and understanding allows drug manufacturers to essentially make the cost of medication whatever they would like it to be. Having generic medications puts the necessary pressure on manufacturers to lower costs.

Custom Medication Dispensing Programs

Our highly talented team consists of account managers, CSM’s, and clinical pharmacists that understand the pharmaceutical industry and the supply chain it so desperately relies on. Through this knowledge we can provide all levels of support and program optimization.

We accomplish our mission of providing custom dispensing solutions in a convenient and easy to utilize manner. A custom medication dispensing program can help your customers reduce or eliminate their out of pocket costs by focusing on the areas which they need the most.

Packaging medications in ready to use prescription containers, offering user-friendly software to ensure compliance and efficiency, and negotiating the nation’s largest portfolio of insurance contracts are just a few of the things A-S Medication Solutions does to offer the best medication dispensing services.

Contact A-S Medication Solutions if you have any questions about our programs or services.