Prescription Costs: Why Are They Going Up?

My patients who require prescriptions all comment that the same drugs that they have taken for years seem to slowly increase in cost with every refill. This isn't my patients' imagination -- according to the Wall Street Journal drug costs have risen every year for the past few years. The most likely reason has nothing to do with development costs (there aren't any for 20 year old medicines) or  declining company income (Pfizer alone made over $7 billion in profit last year). It's simply because they can chargewhatever they want. Despite drug development costs generously supported by NIH research grants to universities (your tax dollars at work), Congress has blocked Medicare from negotiating the price of drugs. Political contributions tell the story:

On a retail level, filling prescriptions has been consolidated into a handful of large corporations who seem to have a store on every corner (CVS, Walgreen, RiteAid, etc.), and control almost 80% of the prescription market, stifling smaller competitors. Large businesses increase prices (& profits) with marketing techniques such as inducing cognitive dissonance (customers associate higher prices with the importance or quality of the drug) and bundling (charging a higher price but giving a gift card or loyalty bonus as inducement). Consumer Reports found that one chain (Walgreens) denies Medicare & Medicaid recipients discounts offered to other customers, citing “lack of clear guidance from the federal government on offering discounts". 

This type of price gouging and customer manipulation is bad enough when trying to buy a television or mobile phone. It's downright vile when the patient's health is at risk.