If you’re one of the 3-in-5 Americans who take prescription drugs, your pocketbook may be getting crushed as a result. In the U.S., we now spend over $309 billion on prescription drugs every single year. That’s a rise of over 38% in just the last two years! This staggering price increase isn’t because people are using more meds, though. It’s because pharmaceutical companies can get away with charging more. And hospitals, doctors and patients who need the medicine have little choice except to pay up.
Both generic and branded drug prices are increasing as well,
eliminating once-more-affordable alternatives. And the most-expensive drugs aren’t necessarily new and innovative miracle cures. In fact, many are commonly used and have been on the market for decades. For Americans, prescription drugs are becoming one of the biggest financial burdens we face. Especially for retirees who could never have predicted or planned for this. You really only have two options when a medicine you take increases in price:
1. Make monetary sacrifices elsewhere to afford the new rate, or 2. Stop taking the drugs altogether and face the consequences.
For most people, option two isn’t even an option. If you’ve been reading my Afternoon Editions
for any length of time, you know that I am a fan of free markets, free minds and the free choice of individuals to do what they want with their hard-earned money. That also means having a healthy dose of skepticism when it comes to government solutions that come in the forms of more laws and regulations. Especially when the biggest beneficiaries aren’t the citizens themselves … Consider that Big Pharma has spent $3.4 billion in federal lobbying since 1998 — more than any other industry — to get lawmakers on the payroll and make sure no one gets in their way.
One of the most-famous cases of pharmaceutical price-gouging
came in late 2015. That was when Martin Shkreli, now-former CEO of Turing Pharmaceuticals, raised the price of the drug Daraprim by 5,000%. Although price hikes like this have happened before, Shkreli instantly became public enemy No. 1 for his complete lack of empathy toward consumers. Unapologetic to this day, the former CEO doubled down on his decision by saying, “I would have raised prices even higher.” Related story: A Smirk of Defiance, or Just Dumb Hubris?
Daraprim is used to treat a rare condition known as toxoplasmosis. It is only prescribed to around 2,000 patients in the U.S. For as notorious as Shkreli has become, not that many people use Daraprim and thus were mostly affected by the increase. Then there is pharmaceutical supplier Mylan, which took the price-hiking practice much further when it raised the prices of its popular allergen injection, the EpiPen. Mylan acquired the decades-old product in 2007 when pharmacies paid less than $100 for a two-pen set. Since then, the company has been steadily raising the price of this life-saving device. Related story: Price-gouging; the Senator’s Daughter; Cover from Washington
In 2009, a pharmacy paid $103.50 for a set. By July 2013 the price was up to $264.50, and it rose 75% to $461 by last May. This May, the price spiked again to $608.61. Unlike the small group effected by the Daraprim increase, 3.6 million Americans were prescribed EpiPens last year. This type of price hike has a much greater impact and has affected the livelihood of millions of families in the U.S. Meanwhile, Mylan CEO Heather Bresch’s annual compensation has soared more than 700%, to $19 million.
These examples, while extreme, are far from unusual … Take a look at some of the other recent price increases involving the most prescribed drugs in America …
Pfizer’s pain medication Lyrica jumped 45% on a per-prescription basis between 2014 and 2013, according to Medicare data. Lantus, a popular form of insulin, jumped 41% on a per-prescription basis, reaching $403 in 2014 from $285 in the prior year. Merck’s cholesterol medication, Zetia, had a 21% jump in per-prescription prices in 2014, rising to $290. Abilify, used to treat a number of psychiatric illnesses, rose 17% in the last year.
It’s not like this is happening behind closed doors, either. But there is something we can do about it. And it starts at the ballot box. Now, I know many of you are frustrated with what’s happening at the national political level, and I don’t blame you. However, there are state and local races where you can also make your voice heard. California
is voting this upcoming November on Proposition 61
, which would enact various forms of price regulation. A similar type of bill is being voted on in Ohio
in 2017. If radical drug price increases are something you or a loved one have fallen victim to, please share your story with us by leaving a comment in the comment section below. Happy and healthy investing, Brad Hoppmann