Prescription Drugs: A Model-Based Analysis

Although total spending provides insight into overall health care spending, additional indicators are used to measure changes to health care financing. These include the amount spent calculated as a percentage of GDP and the amount spent per capita. As a percentage of gross domestic product (GDP), CIHI reports that health care expenditure decreased from 11.6% of GDP in 2011 to 10.9% of GDP in 2015 (image 2: CIHI spending as percentage of GDP). This decline is corroborated by the World Health Organization (WHO) analysis

In recent years, prescription drugs spending has been one of the most rapid rising components in the healthcare industry. In 2008, prescription drugs spending

In contrast to the newer prescription drugs, already existing prescription drugs cumulatively increased 81% from 2005 to 2013. Of these prescription drugs, the ones that treat chronic conditions have had a price increase of $4,336 in 2006 to $11,870 in 2013. These high price points on drugs that have been on the market for several years are a significant factor in the accelerating prescription drug inflammation. An example of rise in existing prescription drugs is Jazz Pharmaceuticals' Xyrem, a drug which purpose is to treat narcolepsy, was in 2007 priced at $2.04 per 1-milliliter dose. In 2014, Jazz Pharmaceuticals' Xyrem was priced at $19.40 per 1-milliliter dose. This means that there was 841% price increase over the course of seven years on the same exact drug. Jazz Pharmaceuticals' is not the only company increasing its prescription drugs in such high amounts. Eli LIlly had a price increase of 350% over the course of 6 years from 2007 to 2013, and Mylan hiked its epipen cost that treats anaphylaxis by 220% in the same six years. Companies say these costs are higher due to a number of reasons. One being that the high costs of these prescription drugs are being used to help find more efficient cures to disease, saving money in the long run. Another being that everything in our economy is inflating so it is only natural that prescription drugs increase as well.

Prescription drug prices rose three times faster than inflation in the decade between 1981 and 1991, making the pharmaceutical industry the nation's most profitable business. Prescription drugs even exceeded the rapidly rising inflation rate for all other medical services. They now represent at least 10% of all the medical

How do factors, such as research and development, contribute to the high cost of medication?

In general, healthcare spending grew 1.2 percent faster than the overall nation’s economy. Some of the reasons for the increase in health care spending are the fast growth of private insurance, Medicaid expansion, and the rapid increase of prescription drugs cost. In order to understand how each of the mentioned reasons impact the overall healthcare expenditure, it’s important to discuss one-by-one; however, this paper focuses only on financial issues in prescription drugs (Martin, Hartman, Benson, & Catlin, 2015).

Pharmaceuticals play a more prominent role in health care Systems. The North American market today comprises 47 percent of the global prescription drug market, which now exceeds half a trillion dollars, with Americans spending approximately $251.8 billion annually on pharmaceuticals. This is up significantly from a decade earlier, when American consumption represented approximately one-third of the world market (2006) IMS Health). America's insatiable demand for prescription drugs has led to serious cracks in the drug supply chain of the world's leading pharmaceutical market (Wyld, 2008).

Throught the years the cost of healthcare has increased at all levels and in various cost amounts. Many of healthcare aspects such as pharmaceuticals, hospital care, insurance, and long term care have been affected. There has been significant increase than can be seen and compared to as much as five, ten or even fifteen years back. These effects are not fixed and is ranged differently among people who are single or a married couple with a family for instance.

This source should be considered credible as it comes from a well-respected news outlet, The New York Times. The author can also be considered an expert in this field as she is a non-practicing doctor. Another reason this source can be considered credible is due to its use of factual evidence straight from the primary source to explain the cost of drugs right now. An example of this is when Rosenthal quotes Juan Carlos Molina, the director of external communication for GlaxoSmithKline, the company that makes Advair, who states “a medicines price is closely linked to this country’s model for delivery of care”(Rosenthal). A limitation to this article pertains to the fact that it primarily focuses on Asthma medication. While this may limit the relevancy of the article's argument, there is still a clear price increase for other drugs in today’s market as well, which is expressed clearly by Rosenthal. I will use this article to provide context regarding the cost of drugs

Dr. Zeke Emmanuel brought to attention the fact that specialty drugs are going up at much higher rates. An example he gave

One of the biggest, if not the biggest itself, health care costs is drugs for patients (Hurter, 2006). There is a 15 percent raise in health care costs each year (Hurter, 2006). The spending on the specific medicines has blown up to 30.9 %; and research is indicating that this could grow by 4 times by the year 2020 (“The high prices of prescription drugs,” n.d.). This number would reach $400 billion by 2020 (“The high prices of prescription drugs,” n.d.). This increase in drug expenditure comes from truth that people are consuming more medications as a result of these people increasingly developing continual sicknesses (Hurter, 2006).

No single factor explains why health spending has grown at the rate it has over the past decades. Rather, several influences collectively contribute to the situation. Some causes outlined in the book includes, Inflation, which is indicated by the rising consumer price index, has continued to affect all goods and services in the United States (Lundy & Janes, 2016, p. 208). Drug costs increased at nearly twice the annual rate of inflation between 2006 and 2010 (Government Accountability Office, 2011). Drug companies often market new, very expensive drugs directly to consumers, who then request them from their physicians. In addition, companies raise the prices on older drugs that research shows to be most effective.

They discuss why are the reasons the factor in the price changing of this drug treatments.

$3.12 trillion (17.4 per cent of GDP) spent on healthcare in 2016, 10 per cent of this amount was on prescription drugs. The forecast report of NHEP 2016 and 2025 stated that this amount expected to rise.

Commodities such as food, cars, and even precious metals have steadily increased year after year which is something that is widely accepted as ‘inflation’. The dollar in 2016 isn’t worth what the dollar in say, 2010 was, but salaries are often adjusted to take the rise in commodities into effect. Prescription drugs however do not fit into the typical mold of the commodity, that steadily increases in price year after year. Prescription drugs in