Throughout American history the national budget has always been an issue of great concern to American citizens. Americans are extremely conscientious of how the money that they give to the government, in the form of taxes, is spent. Many American’s must carefully budget their money, so it can be assumed that a notable increase in one area of spending would cause criticism. This is what is currently causing problems within the pharmaceutical market and causing controversy over Pharmaceutical Companies and how they are pricing their products. Consumer Reports released an article stating that all of U.S citizens have spent a total of $424 billion on prescription drugs in the year 2015("Is There a Cure for High Drug Prices?."). This amount, in comparison with 2014, sees a 12.2 percent increase. This statistic also saw a 13.1 percent increase from the previous year, 2013. The pharmaceutical industry is currently seeing the largest annual increases when compared to any other market on the national scale. These sudden increases in prescription drug prices has become a problem when the pharmaceutical drugs that these companies are selling become too expensive for the average American family to afford. For families that rely on lifesaving or life sustaining medications like insulin, a medication needed everyday for a patient’s entire life, these drastic increases in prices have made it very difficult to get those medications. In some cases, those in need must then sacrifice other aspects of their life in order to get the medications they need to continue living a healthy life (Deangelis). This becomes an ethical issue when it is revealed that there is no need for these increasing drug prices and that pharmaceutical CEO’s raise the prices of their medications for their own benefits. Throughout this paper, the criticism of Pharmaceutical companies and their corruption over the pricing of their medications will be discussed and the immorality of how it is legal for Pharmaceutical CEO’s to be able to increase the prices of pharmaceutical drugs to their liking as well as why they should make their prices affordable, so to make their drugs accessible to those who need them, will be proven. 

The root of the problem of increasing drug prices begins with the pharmaceutical companies that are in charge of making these drugs. Many of the CEO’s of these companies have been accused of pharmaceutical greed because of the price hikes that they have implemented on the drugs that their companies produce. Two very well-known and highly broadcasted examples of pharmaceutical greed occurred within the company Valeant. Johnson, a staff reporter for Modern Healthcare Magazine shares in his article, “Valeant raised the price of two heart drugs, Nitropress and Isuprel, by 525% and 212%”. Valeant had only very recently acquired the rights to produce those drugs, and within months of obtaining those rights the CEO of Valeant, Michael Pearson, raised those prices drastically. This came much to the shock of those who are in need of these drugs. Due to these drugs being prescriptions that cater to those with heart problems, they are essentially mandatory to live (Johnson). In simpler terms, the CEO’s of big pharmaceutical companies have been, and still are, raising the prices of drugs that they know are strictly mandatory, so that the people who need them have no other option but to buy the drugs that they need. Being able to do this is unethical, and seemingly illegal, but as reported by Consumer Reports “there is nothing restricting how much a company can raise their prices” ("Is There a Cure for High Drug Prices?."). In fact, “the United States allows pharmaceutical companies to charge whatever they want as long as they do not collude with one another in setting the prices”. Pharmaceutical companies have been smart about the drugs that they increase their prices on, ensuring the drugs with drastic price increases are those that have almost no substitutes. This makes sure that their customers have no other choice, other than to be loyal to that company and continue purchasing that drug (Deangelis).

Another strategy implemented by these companies in order for them to make more money off their drugs is through a process called evergreening. Evergreening is a way for pharmaceutical companies to cheat the FDA through loopholes in their drug patenting laws. Pharmaceutical Companies implement this by changing the formula of a drug ever so slightly. One way that they do this by combining two older but similar drugs to form a “new” one. Pharmaceutical companies can also employ a change to their medication where they create an extended release version of the drug and market it as a brand new product. There are many ways this process can be utilized and taken advantage of, including a change in the way in which the drug is delivered. This means that a drug that was once administered through a shot could then be taken orally as a pill or a liquid, or released from a patch instead. This works because each time a new change is applied to a drug it can then be sent to the FDA to become patented. The federal government can then provide up to 20 years of protection to this drug, meaning there can be no generic competitors. This then allows pharmaceutical companies to hold the entire market and therefore set the price of that medication to whatever they want it to be (“Is There a Cure for High Drug Prices?).  Reed Beall, a member of the Faculty of Medicine and Faculty of Law at the University of Ottawa in Canada writes about evergreening saying that “Some [new drug products] are actually the result of marginal innovation and incremental patenting of existing products, but in such a way that confers no major therapeutic improvement. This phenomenon, pejoratively known as evergreening, can allow manufacturers to preserve market exclusivity, but without significantly bettering the standard of care.” (Beall). He continues on to say that this process reduces expired patents on medications and introduces extremely similar medications claiming to be new to the market and thereby keep competing, possibly less-expensive generic products off the market (Beall). These consistent patents on drugs have produced a shortage in generic drugs over the past couple of years. The low amount of generic drugs on the market means a lower income for the producers of these generics. So, in the nature of the American economy, prices of these generics are rising so that the generic companies can profit off of their products. This still affects Americans who count on generic brands being cheaper than name brands so that they can afford their medicines, but still get a high price tag because of the competition between them and pharmaceutical name brands (Jaret).

Pharmaceutical companies have claimed that part of their reasoning in increasing their prices on their medications is to fund research and development going into making these pharmaceutical drugs. However this can be debunked because, with 38% of their research funded by taxpayers and another 48% funded by grants, there is not a large sum of money left to be covered and thus this does not justify such a large increase in the prices ("Is There a Cure for High Drug Prices?."). Companies also argue that they spend up to twice as much on their marketing campaigns than their research and development which is covered by taxpayer’s money. These costs are covered by the companies who produce them and it appears as if these price jacks are to aid the cost of advertising. Spending such a large amount of money on advertising is unnecessary since these drugs being advertised for have no competing companies nor generic brand available (Wheaton). A study done by Dedaviz on “How Much Does Big Pharma Spend On: Sales and Marketing vs. Research and Development” found that big pharmaceutical companies such as Jonson and Johnson and Pfizer spent nearly two times if not more than twice the amount of money on research and development on sales and marketing (Swanson). In summary, these pharmaceutical companies do not need these advertisements at all, let alone elaborate and expensive advertisements. Pharmaceutical companies could very well stop producing advertisements, or cut back on their production value. In cutting advertisements, pharmaceutical companies would save money and be able to limit the increase in drug prices.

In addition to the pharmaceutical companies being at fault for these price hikes, the blame can partially be attributed to the insurance companies involved in providing these medications to customers. American citizens have recently been caught in a constant political fight over whether or not there should be a universal health care option for Americans. A universal healthcare would be a cheaper option for those who cannot typically afford insurance because it allows for different aspects of health care to become more affordable. This is because insurance companies are currently trying to restrict access to healthcare and limit benefits of patients who do gain the access to it. However, if a universal healthcare was to be implemented, less money would be spent trying to invest in a more comprehensive healthcare than what is currently being spent to restrict access and limit benefits (Metz). This hasn’t occurred yet because insurance companies do not want to help you save money, insurance companies are a business and they still want to profit off of the money that you are providing for their service. Insurance companies increase profits by reducing what their coverage entails. In many cases insurance companies have the right to tell you that they simply do not cover something, whether it be a type of medication, a medical procedure, or a simple vaccine. Another way that Insurance companies can influence the price of your medications is due to their freedom to raise a person’s deductible. Consumer reports states ““The dramatic increase in prescription drug costs is definitely contributing to a move” to higher insurance deductibles and greater cost sharing with consumers, says Eyles from AHIP, the insurance industry trade organization.” The magazine continues to report that, “Ten years ago, less than 10 percent of employees with health insurance were enrolled in a plan with a deductible of $1,000 or more. Today, almost half (46 percent) of Americans have those plans, according to research by the Kaiser Family Foundation, a nonprofit organization focused on national health concerns.” This shows us that the increase in drug prices are directly causing an increase in the deductibles given by insurance companies. In part the pharmaceutical companies are still to blame, but insurance companies are partly to blame because what else can they do but raise their deductibles in order to still make a profit. In addition, insurance companies have also started a trend in increasing their monthly premiums, as well as increasing your copays, or having a customer pay co-insurance. This idea of co-insurance has begun to blow up because it leaves the customer with 1/3 of a prescriptions bill still left to be paid, when the customer believed that the insurance companies would cover more than only 2/3 of the price. This being said, the companies who are known for helping citizens afford more expensive medicines and medical bills, are actually working against their costumers because they also need to make a profit, contributing to the greed factor similar to the one running through the pharmaceutical companies ("Is There a Cure for High Drug Prices?.").

The situation occurring between pharmaceutical companies and those patients who are prescribed the medicines with increasing prices is an ethical and moral one.  According to Shafer-Landau’s Fundamentals of Ethics, a moral person would set aside personal interests for the betterment of others. By this standard pharmaceutical CEO’s who raise their prices for no logical reason other than for making money are immoral and are not running an ethical company (Shafer-Landau). John Rawls provides another explanation of how the companies who participate in these activities are not acting ethically. In his A Theory of Justice, John Rawls explains that the principles of justice are chosen behind a veil of ignorance ensuring no one is advantaged or disadvantaged. He also explains that the principles of justice are the result of a fair agreement, the first principle involves equal basic liberties, one of those being that everyone has a right to live. The second principle concerns the arrangement of social and economic inequalities and this can be directed at pharmaceutical companies who take into consideration the social inequality of those with diseases that require a constant medication to survive and play off that inequality in order to make money (Rawls). It is both unfair and cruel to these people who already suffer enough just by having these diseases. 

In order to provide justice to these people who are unfairly being charges high prices for their life sustaining medications, the pharmaceutical companies who produce the medications need to do the right thing by making their medications more affordable. Those who are struggling with this issue are continuously looking for ways to resolve their problems and there are a few ways to do so. For starters, pharmaceutical companies can stop spending so much money on advertising and marketing which makes them have to raise their prices. In addition, The United States government can set out of pocket limits for patients. The government can shorten the length of time between when a new drug is introduced and when a generic can be produced and the FDA can approve more generic brands of drugs. If even one of these solutions were to be implemented then it would cause for the price of medications to decrease tremendously and consequently help millions of people who struggle to afford the medications they need to live. 
