The Impact of the Implementation of Single Exit Pricing for Pharmaceuticals in South Africa

The EpiPen is only one out of numerous lifesaving medications that pharmaceutical companies have increased the price to an amount that the average consumer cannot afford. As both a concerned constituent and a health care provider, I would never want people to have a lack of access to medications that could potentially save or improve their quality of life for any reason. It is now imperative that the government on all levels demand transparency in the cost to create and manufacture medications and also enforce drug price controls. Senator McEachin, this is why I want you to co-sponsor and support Senator Emmett Hanger’s prescription drug price transparency bill (SB487). This bill will require drug manufacturers to give information on the cost of research and development, manufacturing, marketing, price changes, and profits for each prescription drug sold in the Commonwealth of Virginia for a wholesale cost of $10,000 for a single treatment course (SB487: Prescription drug price, n.d.; Silverman, 2016).

Market failure appears when there is a failure in allocation of goods and services. When the market is unsuccessful, the government is called to intervene and correct the failure. Over the years, government participation in the pharmaceutical market has been more wide-ranging than any other good or service. With the government’s ability to regulate, mandate, inform, finance and provide, their intervention to overcome market failure can be beneficial for the economy. Market failure plays a significant role in today’s economy.

Anyone who has purchased prescription medication has probably wondered why they cost so much. The pharmaceutical industry consist of thousands of firms engaged in one or several functions of discovering, developing, manufacturing and marketing medicines for human use. The price paid to a retail pharmacy for a drug is negotiated by the PBM (Pharmacy Benefit Manager) and the pharmacy or pharmacy chain. The pharmacy is left with an option of refusing the business, raising its prices for cash customers or reducing its operation margin. Rising prices for goods encourage producers to find ways of supplying more also guiding purchasers to switch to cheaper alternatives. The price mechanism encourages the productive and careful employment of scarce resources and directs innovative efforts where they are most needed.

Our sister country Canada Health has a drug review board to assist with keeping price points in line for the Canadian people. The drug review board for Canada assesses all new prescription drugs on the market and determines how effective the drug is compared to the relative drug that is already on the market. After adequate research the Canada Health system decides what they are willing to pay for the drug; if they are unable to reach an agreement that prescription is not allowed to be provided with in the country and an alternative approved drug will be used in its place. As of right now for us in the United States, our hands are tied; private and even federal-government provided insurance Medicare, cannot by law negotiate prices with pharmaceutical companies (Kounang).

In general, a company will charge as much as the consumer will bear. Why charge less for a drug when the consumer is capable of affording much more? One example is the case of the anti-Aids drug, Crixivan. The producer Merck, prices it at $600 to poor countries in Latin America and Africa. However, the same drug is priced at $6,099 in the much more affluent United States [1]. Although more stringent regulations from the FDA may contribute the higher prices in the United States, the high prices are mostly the result of the consumer’s ability to afford more. In Africa and Latin America, the low prices are necessary to sell the product at all. It’s better to make very little from a market than none at

Many people see the drug price increases made by Martin Shkreli of Turing Pharmaceuticals of the toxoplasmosis drug Daraprim by 5000%, or, the EpiPen’s 400% price hikes as being immoral, unnecessary, and just price gouging, but others and I argue that the increases are well justified and really not detrimental to consumers. Dr. Nitin Damle of the American College of Physicians had this to say on the matter to members of congress, “The research, development, regulatory, and payment systems for prescription medication are deeply intertwined, and the pressing issue of drug pricing and payment will require comprehensive efforts not only by Congress,

“The Fall of the House of Usher” by Edgar Allan Poe is an ominous tale, told in retrospect, of a man who visited an old friend, Roderick Usher, who was dying of a mental illness. This visit was quite different then how the narrator believed it would be. The narrator explained the “insufferable gloom” he felt when he saw the mansion, and this dreary feeling only grew stronger the longer he stayed (Poe 1265). The narrator endured the bleak time with his old friend whose condition only worsened. Roderick’s sister was ill as well and eventually died. They buried her in the basement only to have her crawl out alive days later. This shock scared Roderick to death while the sister’s illness finally took her life. The narrator ran out of the mansion completely unnerved as the House of Usher crumbled to the ground.

To Kill A Mockingbird by Harper Lee is very in depth when it comes to symbolism. One could not read through the novel and not notice at least one symbol hidden in the text. Harper Lee did an excellent job when writing the novel. Taking years to fully compose, it is no wonder why the novel in it's essance is so well done. The story is so intertwined and complex on many levels. The complexity is mainly caused by the symbols used by Harper Lee.

The prices in which the medication are set are necessary for research and development. Roy P. Vagelos, discusses about the problems regarding restricting pharmaceutical companies in the written source Are Prescription Drug Prices High?. For instance, it can reduce the profits to support research investments, since it costs at least $231 millions dollars in order to bring one new prescription medicine to the market and in a pharmaceutical company like Merck, there are at least 4500 researchers who work to develop products (Vagelos 1). In other words, it costs millions for researches to develop at least one new drug to present to the market and it also costs to pay researchers to help develop these new drugs. In addition, the article The Real Cost of “High Priced” Drugs,

The pharmaceutical industry claims that increasing drug cost are justifiable due to the cost involved in advancing a drug to market and marketplace competition, even though policymakers want transparency in pricing to understand the true cost involved in drug production.

Additionally, the U.S government managing pharmaceutical prices in a direct manner would give health insurance programs the jurisdiction to settle medication costs with private companies. This approach would essentially “bend the cost curve” of pharmaceutical drugs such that more efforts would be geared towards the production and promotion of cost-effective medication (Bodenheimer et al). In other industrialized countries, national health insurance programs have the authority to negotiate drug prices with manufacturers. These systems also have the power to dismiss expensive medication that does not greatly enhance the health of patients (Kesselheim). It might seem that my proposal would decrease competition amongst pharmaceutical companies by discouraging technological innovation within health care. However, this approach would boost competition amongst private corporations to cut back on the use of expensive technologies - which is complemented with high production costs - in order to allocate allocate their funds towards the innovation of cost-effective drugs. Patients would be able to afford their medication and experience major benefits to their health, thus increasing demand for the

High drug prices are the result of the approach the United States has taken in granting government protected monopolies to drug manufacturers. A few short-term strategies to address high prices include enhancing competition by ensuring the availability of generic drugs; and effectively educating patients, physicians, insurers, and policy makers about these choices.

BEING A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT OF ACCOUNTING, FACULTY OF MANAGEMENT SCIENCES, UNIVERSITY OF ABUJA, ABUJA, NIGERIA

Significance of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

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