Posted: March 24th, 2023

Prescription Drug Pricing

Healthcare Policy: Prescription Drug Pricing

The cost of prescription drugs in the United States has been a significant issue for the past few decades. The nation, compared with other western countries, spends two times as much on prescription drugs. As a result, the pharmaceutical industry experiences increasing cost. According Berg (2018), the state spends almost $330 billion per annum on prescription drugs. The share of the country’s spending for drugs was 5.6% of the entire health care budget in 1990. However, the shared increased to almost 10% in 2016 (Berg, 2018). The high cost of drugs can deny the patients critical treatment and crucial doses, or make them skip the whole procedure. Regardless of the vital role of physicians and patients in the continuum of care, they are often left without information about the reasons for fluctuation of drug prices every year. Besides the importance of prescription drugs in the healthcare system, the country lacks an effective pricing policy that would regulate prices and make such drugs more affordable.

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Description of the Issue

The health care spending in the United States has increased over the decades, causing serious challenges for physicians and patients. According to National Health Expenditure Accounts, the rate of growth in 2013 was slower than in 2014 (Martin, Hartman, Benson, Catlin, & National Health Expenditure Accounts Team, 2015). The authors highlight that by 2014, the health care budget reached $3.0 trillion or $9,523 per patient. Unfortunately, the rate of growth in health care spending is higher than the country’s economic growth. For example, in 2014, the nominal gross domestic product (GDP) grew by 4.1%, while the health care spending increased 1.2% faster than the general economic growth (Martin, Hartman, Benson, Catlin, & National Health Expenditure Accounts Team, 2015). Health care spending has continued to increase since 2016 (Berg, 2018). The Patient Protection and Affordable Care Act (PPACA) introduced health insurance marketplaces that affect health care spending in the country (Schumock et al., 2014). The policy has remained ineffective in reducing the cost of prescription drugs in the country. Despite the adverse effects on patients and physicians, the federal, state, and local governments have not succeeded in implementing a successful pricing policy.

However, the country has witnessed some attempts to regulate health care spending. One of the recent efforts made by United States Senator, Herb Kohl (D-WI) introduced a bill, “The Prescription Drug Cost Reduction Act,” trying to reduce the cost of drugs. The proposal necessitates manufacturers of drugs in the country to implement Medicare Part B with similar discounts as Medicaid. The policy is different from the PPACA, which offered insurance cover to provide affordable health care services to Americans. The proposed policy targets pharmaceutical companies to control the increasing cost of prescription drugs. The plan aims at providing an opportunity to reduce the cost of care without relocating the burden to patients or jeopardizing quality. The government should also control other issues such as brand-name drugs, which are marketed exclusively, increasing the cost (Kesselheim, Avorn, & Sarpatwari, 2016). The policy should increase competition within the industry to allow firms to sell drugs at a lower price. Through its agencies such as the FDI, the government can control the drug market and consequently reduce the cost of vital medicine. Such a policy will benefit care providers, the health care system, and patients.

Analysis of the Issue

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The high cost of prescription drugs influences health care spending with significant clinical implications. Prescription drugs affect health care because they are necessary in the provision of safe and quality care (Kesselheim, Avorn, & Sarpatwari, 2016). Nurse practitioners play an important part in the continuum of care because they support effective treatment and management of various diseases. They also have a role in ensuring a balance between the quality of care and access to effective drugs. They are affected negatively by the high cost of medicine in the country. Nurse practitioners will benefit from a policy that controls the cost of drugs because of the opportunity to provide quality care to their patients.

The healthcare system faces a challenge regarding the increasing cost of care. The country has been criticized for having the most costly system compared with other developed countries. The high cost of prescription drugs is among the causes of the problem. Therefore, policy-makers should consider the available options to cut the cost and make health care services more affordable. The healthcare system will effectively compete with other developed countries regarding spending on prescription drugs. For example, in 2013, prescription drugs’ per capita spending was $858 against an average of 400 for 19 developed countries (Kesselheim, Avorn, & Sarpatwari, 2016). Therefore, reducing the cost will improve the image of the United States healthcare system across the world.

Patients in the United States suffer from the high cost of care, especially those who cannot afford costly services. Some patients have to skip critical drugs or miss treatment entirely because of the inability to pay for the services (Neumann & Cohen, 2015). Cost containment effort requires the patient to pay a high price for drugs. As a result, the affordability of prescribed regimens becomes challenging with adverse effects on patient outcomes. Providing cost-effective treatment is necessary to promote safe and quality care (Kesselheim, Avorn, & Sarpatwari, 2016). Reducing the cost of prescription drugs will have a greater effect on patients that other policies that have attempted to make health services affordable, such as PPACA. Some drug therapies take relatively long periods, which cause a significant burden on patients.

Significance of the Issue

The main policy concern in the country is about the possibility of reducing the cost of prescription drugs without transferring the cost to the consumers or affecting the quality of care. Policymakers should implement options that will incentivize pharmaceutical companies to reduce the current drug prices while maintaining the quality of the medicine. However, the government should work with the manufacturers to determine the cost allotment in the production of the drugs since most of the companies are profit-making entities (Krishnan, 2018). Therefore, any efforts to reduce the cost of drugs should consider the effect on the oligopoly nature of the pharmaceutical industry. Potentially, the solution lies in policies that will increase competition in the industry.

Policy changes in reducing the cost of prescription drugs will affect healthcare spending besides improving the quality and safety of care. The efforts should consider the current estimates of the increase in prescription drug spending in the country. For instance, the Center for Medicare and Medicaid Services (CMS) estimates an increase of an average of 6.3% every year from 2016 to 2025 (Krishnan, 2018). Policies should be implemented at the local, state, and federal levels to reduce the cost and improve care quality in the country. Such a plan will be a protective measure for patients, especially those who cannot afford critical health services. It will also ensure greater compliance with treatment regime since patients can pay for the medicine.

Researchers understand the critical factors that cause the increase in the cost of prescription drugs. Some of the elements include lack of competition, exclusivity, patent extenders, and pay-for-delay (Kesselheim, Avorn, & Sarpatwari, 2016; Krishnan, 2018). However, research is limited regarding possible solutions to these challenges that would allow the companies to reduce the cost without affecting the quality and accessibility of drugs. Therefore, finding a practical solution to balance the cost reduction goal and the profit-making objectives of pharmaceutical companies is necessary. Researchers should also study possible factors to control competition.


Health care spending is one of the most critical policy issues in the United States. The government and other stakeholders spend a considerably higher amount in various health services compared with other developed countries. The high cost of prescription drugs is among the primary causes of increased health care budget. Research shows that the pharmaceutical companies increase the cost of different types of medicine regardless of the ingredients remaining the same. Although the problem has persisted over the years, the country lacks an effective policy to reduce or control the cost of prescription drugs. The limitation allows pharmaceutical companies to revise their prices upwards, creating a cost burden to health care providers and patients. Consequently, the government should implement a comprehensive prescription drug pricing policy to support service provision and ensure quality and safety of care provided to patients. However, further research is necessary to assist stakeholders in finding effective ways of balancing the cost-reduction function and the overall quality of care.

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