Drug Deception

The lead article in today’s New York Times is titled, “Drug Companies Increase Prices in Face of Change.” It describes an increase in prescription drug prices of about 9 percent per year despite promises by the drug industry to cut up to $8 billion to help contain the rise in healthcare costs. A future cut will now bring the prices back to their current level.

The rise in prices contrasts with the Consumer Price Index, where costs have fallen by 1.3 percent.

While industry executives attribute the rise to the expensive research process involved in developing new drugs, a Harvard economist documented a similar rise in prices before Congress added drug benefits to Medicare.

In my opinion, this development depicts a common problem with unregulated capitalism. Companies will always try to maximize profits and only later develop a rationale should that effort come under public scrutiny. Just like banks used bailout money for extravagant bonuses, the healthcare industry will always try to anticipate the costs of upcoming regulations and act to either get ahead of the curve or find a loophole.

These actions by the drug companies emphasize all the more the need for effective federal regulation. Right now, the average annual cost for a daily prescription drug can rise as high as $2,000.

No wonder some people are faced with an intolerable choice between medicine and food.