Why are the prices of pharmaceutical drugs rising so quickly, and what can be done to solve this problem?  That is the topic of this paper and, unfortunately, it is not a very well-known one.  It is a topic that directly affects millions of Americans from all ages, genders, and ethnicities and yet no real solutions have been found for the problems it possesses.  The fact of the matter is this: the prices of pharmaceutical drugs in this country are increasing at unprecedented rates.  Naturally, there is a plethora of opinions surrounding this issue.  Some, like the CEO’s of these companies who enjoy their large salaries, are in favor of these price hikes, while others, like most people that depend on life-saving drugs, are opposed to them.  The goal of this paper is to analyze both sides of this controversial argument, while supplying personal opinions on the matter.  This paper aims to educate the reader on the topic of rising pharmaceutical drug prices, and, in the end, hopefully propose a solution to this very relevant issue that this country is facing.

To begin to understand this quagmire, one must first learn about specific drugs that have experienced price surges in recent years.  By looking at individual pharmaceutical drugs, it is easier to realize how many people are being affected by these rising prices.  Take the drug Daraprim for example.  Daraprim is a name that most people do not recognize, but it is an extremely important drug.  It treats toxoplasmosis which is an infection that affects people that are suffering from HIV/AIDS or cancer.  So, what is the point of all of this?  In 2015 the price for Daraprim was raised from $13.50 to $750 per pill (Consumer Reports 1).  In the blink of an eye, the manufacturer of this drug was allowed to raise its price by a ridiculous amount without any sort of repercussions.  Of course, the general public, and especially the people who take Daraprim were enraged by this colossal price hike, but what good does that do if the law is on the side of the large pharmaceutical companies?

Another example of a drug that experienced a relatively recent price swell is Nitrogen mustard which is used to treat cancer.  This is a drug that has been used to treat cancer since 1949.  Its price remained relatively consistent price for many years until 2006 when, in one year’s time, its price for a course of treatment increased from $33 to $420 (Bach 1).  The cost of this drug now outweighs its usefulness according to many people, as it does not guarantee survival for the patient.  One more important aspect about this drug is that, even though its price continues to rise to this day, its initial rapid price increase happened eleven years ago.  This shows that large pharmaceutical companies have been taking advantage of treatment-dependent people for more than a decade, and that these price inflations are not a topic of recent discussion.  Possibly life-saving drugs like Nitrogen mustard have become unaffordable for some people that have needed it over the past several years, and it is time for something to be done about that.

One final drug that illustrates the quandary of rising pharmaceutical prices is the drug imatinib.  This drug treats chronic myeloid leukemia (CML), and is quite effective as far as cancer drugs go, having increased the ten-year survival rate of people with CML from 20% to 85%.  Imatinib was introduced in 2001 at a base price of $30,000 per year, which seems like a hefty price tag until it is compared to the $92,000 per year that people had to spend on this drug in 2012 (Kantarjian 1).  This example shows the researcher two key points.  One, this drug once again illustrates that the rise of pharmaceutical prices has been a lingering issue for a while.  These price hikes did not suddenly appear last year; they have been happening for as long as some high school students have been alive.  Secondly, the drug imatinib shows people that large pharmaceutical companies will charge for drugs based off their effectiveness.  Since this drug led to such a strong increase in cancer survival ratings, the company that produced it raised its price to increase their profits, effectively cancelling out the drug’s benefits by making it unaffordable for large amounts of cancer patients who need it so badly.

After reading over these examples of pharmaceutical drugs that have seen enormous price increases in recent human history, one might ask themselves: What is the point of all of this if nobody is opposing these price hikes?  Well, the answer to that is that there are people who oppose these high prices, and they are working to put regulations in place to control these large pharmaceutical companies.  One such person is Senator Bernie Sanders.  On September 21, 2016, Senator Sanders gave a speech in opposition to the rising prices of pharmaceutical drugs.  In this speech, Senator Sanders says that he sent out a message on social media asking people about what was going on in their lives regarding pharmaceutical drugs.  He said, “Not surprisingly, the vast majority of the comments that I received… are from people who are outraged by the high cost of prescription drugs in this country, a cost which is going up every single day…” (Sanders 3:28-3:46).  This shows the viewers of this video that there are indeed people who are fighting on behalf of the consumers.  It may seem like the world of pharmaceutical drugs is dominated by the large companies that produce the medicines, but there are politicians like Senator Sanders who are fighting to put regulations in place to control these prices so that everyday Americans can afford their medications.  Hagop M. Kantarjian, who wrote an article for the Journal of Clinical Oncology, says that the pharmaceutical industry needs to establish just prices for their products. He talks about the relationship between price and worth, and how ethics must be considered when pricing these drugs.  Life-saving drugs are useless if the people who need them cannot afford them, and it is time that this country does something to address that very issue.

When looking at ways to solve this problem, the people of the United States must first look at the leaders of these large pharmaceutical companies.  There are hundreds, maybe even thousands of employees that work for these enormous companies, but at the end of the day the CEO’s are the ones who make the decisions that affect everybody.  They have the power to set their prices at whatever they want, and they can even buy smaller pharmaceutical companies in order to increase profits.  One example of a corrupt (now-former) CEO is Martin Shkreli, who was responsible for the price raise on Daraprim pills that was mentioned earlier.  At the time, Mr. Shkreli was the CEO of Turing Pharmaceuticals, a company that was founded in Switzerland, but has a large market in the United States.  It was an already successful company, but for some reason Martin Shkreli felt the need to increase the price of their main pill by 5000% solely out of his own greed.  In late 2015 Mr. Shkreli resigned as CEO of Turing Pharmaceuticals after being arrested on fraud charges.  These charges were ironically unrelated to the Daraprim price hike, which faced absolutely no legal backlash.

Arthur Bedrosian, the CEO of the Lannett, is another man who is responsible for some of these recent price surges.  Lannett is a huge pharmaceutical company, and was named by Forbes to be the fastest growing company in the United States in 2015 (Salinger 1).  Lannett has seen a recent boom in revenue because of the outrageous pricing of their pharmaceutical drugs.  In the past year or two, Lannett has increased prices for an antipsychotic medication by 1,650%, an antibiotic by 286%, an asthma medication by 47%, a cardiovascular medication by 150%, and a migraine medication by 124% (Salinger 1).  All of these new prices increased Lannett’s revenue by millions of dollars, which continues to grow to this day.  The only difference between Arthur Bedrosian and Martin Shkreli is that Mr. Bedrosian did not have unrelated fraud charges to bring him down.  In the eye of the law there is nothing illegal about what these men did in regard to drug pricing, and because of that people like Arthur Bedrosian are still in power, growing their incomes by the day.

A researcher of this topic might ask themselves: How do these large pharmaceutical companies get away with raising the prices of their products at unheard of rates?  Why does the government not interfere and create any sort of regulations?  The answer is that most politicians are greedy, and pharmaceutical companies spend millions of dollars on lobbying every year.  These massive companies spent $51 million on the 2012 federal elections attempting to fund the candidates that supported their agendas (Ludwig 1).  Most of these contributions went to Republicans because the majority of Democrats, including Hillary Clinton and Bernie Sanders in the most recent election, are opposed to the power that large pharmaceutical companies have.  

What makes the whole political lobbying situation even worse is how shameless the companies are about doing it.  Nothing is done secretly.  These pharmaceutical companies openly give away millions of dollars and many politicians gladly accept this money.  Take Pfizer, Amgen, and McKesson Corp for example.  These three pharmaceutical companies spent $1.5 million, $1.3 million, and $1.1 million respectively on federal campaign contributions in 2014 (Ludwig 1).  Not surprisingly, all three of these companies favored Republicans.  The truth of the matter is these numbers apply to only specific elections.  In the big picture, they are only tiny amounts compared to the overall sum of money that the pharmaceutical companies have spent on lobbying.  To put this into perspective, one must take a look at The Pharmaceutical Research and Manufacturers of America, or PhRMA for short.  PhRMA, the leading lobbying group of the pharmaceutical industry, has spent around $150 million since just 2008, and the pharmaceuticals/health products industry as a whole has spent over $3.5 billion since 1998 on lobbying (Ludwig 1) (Open Secrets).  $3.5 billion that could have been used by these companies to research new life-saving medications, or invested in order to keep medical payments down, was instead selfishly used to benefit themselves.  Unless a strong-willed group of politicians and lawmakers are able to stand up to this kind of money and power, nothing will ever change.  Now it seems that with all of this lobbying and the other apparent expenses that these companies face that their CEO’s would have relatively modest salaries.  In reality, though, that is not the case.  Ian Read, CEO of the company Pfizer mentioned earlier, made $23 million in 2014 alone (Ludwig 1).  It seems that in the world of power-hungry companies that have colossal amounts of money to spare, and corrupt politicians, that the only losers are the everyday consumers who depend on the medicines produced by these companies.

Up to this point the reader of this paper may think that all of this is not very relatable to everyday life, and may not thoroughly demonstrate the human aspect of business. Unfortunately, the people in charge of these companies do not show much human compassion when they put profit before people.  On an everyday basis, however, there are many people who are either struggling to afford their medications or cannot afford them at all, so they are forced to stop taking these helpful drugs.  Marlene Condon is a woman who unfortunately faced the latter of these two terrible situations.  For around twenty years, Ms. Condon paid about $32 for 180 tablets of hydroxychloroquine, a drug that helped ease the pain of her arthritis.  After paying $32 for the same number of tablets for around two decades, the price suddenly jumped up to $75 per bottle.  This was inconvenient for Ms. Condon, but she could still afford her medication.  That was until the price of 180 tablets of hydroxychloroquine increased to $500.  Ms. Condon could no longer afford to pay for these pain-relieving tablets, and is now forced to live with her rheumatoid arthritis, a condition that turns even the simplest activities into painful endeavors, without any remedies (Consumer Reports 1).  A price increase of a couple hundred dollars forced this innocent woman to stop taking her medication.  A woman who is someone’s relative or friend is nothing more than a means of profit in the eyes of these ruthless pharmaceutical companies.

Nicole Levin is another person who has been affected by large pharmaceutical companies that are raising their prices.  Ms. Levin struggles from several different types of allergies that can be life-threatening without the right kind of treatment.  She suffers from a mix of environmental, food, and medication allergies, all of which require an EpiPen.  The out-of-pocket cost for Ms. Levin for these life-saving mechanisms?  $200 to $300 per EpiPen (Howard 1).  An apparatus that is necessary for keeping this woman alive is skyrocketing in price, and it shows no signs of slowing down.  Imagine struggling to afford necessary devices.  Imagine living with multiple types of severe allergies, and being forced to buy from a company that only wants money and does not truly care about the consumer.  That is the absurd reality that people who depend on EpiPens are forced to live with.

Many logical people may be asking themselves: How do these large pharmaceutical companies justify their price surges?  The answer that these establishments try to sell to the public is that they need to charge high prices so that they can fund medical research.  That is a decent reason, but how much truth is behind it?  Take the company Gilead for example.  Gilead Sciences, Inc. is an enormous biopharmaceutical company.  In early January of this year, Gilead announced that it would donate around $22 million to help fund twelve new HIV research projects carried out by different medical research establishments (Francis 1).  The list of funding recipients includes different hospitals and medical schools, making Gilead look like a hero in this situation.  The truth of the matter is, $22 million is a lot of money for average people, but for a company as large as Gilead it is practically nothing.  Gilead Sciences had a revenue of $30.4 billion in 2016, and John F. Milligan, the company’s CEO, walked home with about $8 million last year.  That means that less than 1% of Gilead’s revenue went towards funding medical research in the past year.  The point of this is not that people in these positions do not deserve good salaries for the work they have done.  These people do important medical research, and deserve compensation.  However, if they are going to use funding for medical research as an excuse for high prices, it seems like they should be donating more to justify these claims.  Even after taxes and other expenses being taken away from this revenue, this company still has tens of billions of dollars flowing in and yet they try to make that reasonable by donating a little more than $20 million.  It is understandable that this is only one instance, and that there are other times that these companies do legitimately fund significant research, but the math just does not seem to add up.  

As mentioned in the previous paragraph, the main counter-argument that these companies have is that they charge high prices in order to donate large sums of money to fund research.  The problem for these companies, though, is that it is easy to find a counter to that counter.  It has already been established that these companies spend huge amounts of money on influencing politicians instead of funding research, but the other wrinkle in the pharmaceutical companies’ counter-argument is that they spend much more on marketing than they do on medical research.  Johnson & Johnson, one of the world’s largest pharmaceutical companies, spent $17.5 billion on marketing and only $8.2 billion on medical research and development in 2013 (Swanson 1).  Once again, the point is not that $8.2 billion is a small amount of money, it just shows where these companies’ priorities are.  After researching this it now seems ironic how often people see commercials for this company.  Johnson & Johnson has a baby line, Aveeno, Neutrogena, and Clean and Clear.  All of these different sub-companies advertise constantly to try to build up their public image.  They do this to try to make themselves look like a company for the people.  They do not want people questioning where their money is going, or literally any economic aspect of their company, they just want consumers to blindly purchase products that have been shown to them thousands of times in a positive light.  Next to Johnson & Johnson is Novartis, which spent $14.6 billion on marketing, and only $9.9 billion on research, Pfizer, which spent $11.4 billion on marketing and only $6.6 on research, and finally GlaxoSmithKline, which spent $9.9 billion on marketing and only $5.3 billion on funding medical research and development all in 2013 (Swanson 1).  These companies want to paint themselves as good guys, but the numbers do not support them.  How would the public react if these companies said they have to charge more for their products in order to fund their advertisements instead of medical research?  It would definitely be different than the reaction of people being told that they are paying more to help with medical research that may possibly produce new life-saving drugs.  Of course, that is assuming that there are copious amounts of legitimate medical research and development going on behind the walls of these multi-billion dollar companies and that they are not lying to the general public.

It would be ideal if politicians could impose regulations that would hopefully bring about a compromise, however, after reading through many articles on the subject it seems like there are not many solutions out there.  This may be because politicians do not want to implement regulations on these companies because of the considerable amount of money they receive as a result of the lobbying.  Regardless of all of this, Hagop M. Kantarjian, Tito Fojo, Michael Mathisen, and Leoanrd A. Zwelling wrote about several potential solutions in the Journal of Clinical Oncology.  These men suggest that Medicare should be given more power to negotiate how much they pay for the pharmaceutical drugs that are being purchased.  If Medicare could confer with the currently all-powerful pharmaceutical companies, they could potentially save themselves, and the people that depend on their programs, a lot of money.  These men also suggest that the government should stand against pharmaceutical lobbyists, which is not happening at all at the moment.  If politicians were not being so heavily influenced by these companies, then they may pass legislation in favor of the consumers.  Finally, these writers propose that researchers should demand better results, and that drugs’ prices must match their true value.  If American medical establishments can produce high quality drugs that last longer and are more effective, and they price these drugs thinking about consumers and not profit, then this country can start moving in the right direction to abolish this issue.  Sooner or later the citizens of this country must stand up against these pharmaceutical giants and demand change before too many more people struggle, or even die, simply because of the unreasonably high prices of their essential medications.