Drug Makers Raise Prices Despite Promises of Cost Reform

David Mittleman

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Drug makers pledged to help cut down healthcare costs by $8 billion a year, but now it doesn’t look like they are making good on that promise. Instead, in the last year alone, the pharmaceutical industry has raised their wholesale prescription drug prices by 9%. Instead of cutting down on costs, that raises the nation’s drug-related healthcare costs by $10 billion, and represents the highest annual rate of inflation on drug prices since 1992.

Originally, drug makers had touted their agreement with the White House and the Senate Finance Agreement chairman to trim $8 billion a year from the nation’s drug costs, or $80 billion over 10 years, by giving rebates to older Americans and the government. However, the recent increase in prices would essentially cancel out the savings for at least the first year of the plan, if not the entire 10 years.

Nevertheless, drug makers argue that there are valid business reasons for raising prices. Specifically, they argue that they are forced to raise their prices in order to invest in future research and development of new drugs, especially as patents expire on previous drugs. While drug makers claim their “reasons” for raising their prices, many Americans who do have drug insurance will be forced to pay out-of-pocket for the leftover cost of overpriced drugs that insurance won’t entirely cover.