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Pharmaceutical Collusion Outline

Introduction

a. Background: The lack of regulation of drug prices in the United States has resulted in an ethical conflict where pharmaceutical companies collude in order to raise the prices of sometimes life-saving drugs.

i. In May of 2019, U.S. states filed a lawsuit accusing Teva Pharmaceuticals USA of colluding with 19 other drug companies to inflate drug prices. Sometimes these inflations were as large as 1,000%. (Drugmakers).

ii. Turing Pharmaceuticals made news when they raised the price of Daraprim from

$17.50 a tablet to $750 each. This rise in price significantly impacted care for those who need this drug to live (Cerullo).

b. Thesis: As the collusion between pharmaceutical companies continue to cause serious problems for the general public and smaller medical practices, as well as give rise to

( there must be more radical steps )major lawsuits, behavior.

taken to fix and correct this unethical

The Problem

a. Pharmaceutical collusion goes by without being noticed.

i. Lawyers find evidence of collusion and investigate.

ii. Evidence of large inflation of generic drugs.

b. These large inflations have been gouging the public.

i. Life saving medications have been increased to astronomical levels.

ii. Since people have to have these medications to survive, they are forced to pay these outlandish prices.

( The challenges that have been placed on smaller medical practices due to these )c.

( price inflations hurting small businesses )

i. Medical Practices have to buy their medicine from these large brands, and with increased prices they have to charge their customers larger amounts.

ii. Many of these practices are in more remote areas and customers don’t have enough money to pay for medicine.

iii. Because many customers can’t pay they have to default which means the practices lose money and can easily go out of business, leaving these communities without a close medical facility.

( Many argue that the current pharmaceutical pricing system without regulation should )Possible Solutions a.

( remain in place. This is because the high prices increase funds that can be contributed )

( towards medical research. )

i. ( medical research )Because of the large inflation of drug prices (sometimes more than 1000%) it is questionable whether this rise in prices is more closely related to

( or greed. )

b. An external referencing system (ER) places a price cap on pharmaceuticals based on identical products in other countries. This is a potential option to reduce pharmaceutical collusion in the United States.

i. This policy was implemented in the Netherlands and Switzerland in 1996. In the Netherlands maximum drug prices are established using an average of drug prices in Germany, France, UK, and Belgium. This system resulted in lower pharmaceutical prices in the Netherlands.

ii. Switzerland implemented this a ‘positive list’ of reimbursed pharmaceuticals. Drugs included on the positive list do not have a price exceeding the average prices in Germany, Denmark, the Netherlands, and the UK.

( jaredpoole 2020-03-28 20:27:12 -------------------------------------------- Why is that, exactly? Is it because it would require the govt to step in between the private payer and the private provider in the healthcare system? Adding kind of an extra step compared to a single-payer or NH S-style system? )Preferred Solutions

a. The preferred solution to the problem of pharmaceutical collusion in the United States is the implementation of a pharmaceutical regulation system to control drug prices in the United States. This program will guarantee and improve public health and safety as well as limit expenditures on drugs (Atella).

i. ( b. )Price controls on pharmaceuticals reduce financial uncertainty associated with health care (Atella).

There are potential weaknesses that come up with a pharmaceutical regulation system in the United States.

i. This type of program works most effectively when governments are the provider and regulator of health insurance (Atella).

1. ( -------------------------------------------- I thought of another concern: Isn't an ER system kind of parasitic off other countries' healthcare regimes? Like, they did the work to control pharma prices, and we just say, "yeah, pay the price that they negotiated." And if so, then aren't we kind of at the mercy of whatever happens to our "host" (in this parasite analogy). For instance, what if the Swiss succomb to the overtures of phrama and allow prices to rise? Or, what if international phrama countries decide to collude (if that is even possible)? )The United States does not have a national health care system so there could be issues with pharmaceutical regulation in this type of a market.

ii. Regulating pharmaceutical price leads to a reduction in the availability of high quality drugs (Atella).

1. This is because in the current United States system higher quality drugs are placed at a higher price which lowers demand and increases availability.

( Conclusion )

a. The lack of regulation of drug prices in the United States has led to ethical conflicts between drug companies and the government. Collusion between pharmaceutical companies pose serious issues for public and medical practices, and more aggressive steps must be taken to fix these unethical behaviors. Establishing an external reference system and setting price caps on drugs of the same product in other countries is a potential option to reduce drug collusion in the United States. Therefore, this is the preferred solution to stop drug collusion in the United States and allow U.S. citizens access to reasonably priced pharmaceuticals.

Sources Cited

Atella, V., Bhattacharya, J., & Carbonari, L. (2012). Pharmaceutical Price Controls and Minimum Efficacy Regulation: Evidence from the United States and Italy. Health Services Research, 47(1pt1), 293-308.

Cerullo, M. (2020, January 28). "Pharma Bro" Martin Shkreli charged with fixing price of life-saving drug.

Drugmakers allegedly inflated prices over 1,000% and 44 states are now suing. (2019, May 13).

Garcia Mariñoso, B., Jelovac, I., & Olivella, P. (2011). External referencing and pharmaceutical price negotiation. Health Economics, 20(6), 737-756.