If you've recently visited a pharmacy to pick up a prescription, you might have had sticker shock at the price tag of your medication. If so, you're not alone. The high cost of medications is no secret, with people aged 65 to 79 paying an average of $456 out of pocket per year for their medications. For those with chronic conditions or large families, however, out-of-pocket totals can be significantly higher, putting a strain on budgets.
The steep expenses we face aren't merely coincidental. As Matthew Herfield, Co-Founder and CEO of prescription discount card provider BuzzRx, explains, several factors contribute to high prescription drug costs in the United States, ranging from manufacturer research costs and poor health plan coverage to monopolies and a lack of transparency.
Below, we delve into these factors further, along with strategies individuals can employ to reduce prescription expenses.
1. No Government Regulation
"While the Inflation Reduction Act is poised to help lower drug costs for select high-price Medicare drugs in the coming years, the U.S. doesn't have the same level of control over medication prices as other countries," Herfield explains.
"In Canada and Europe, there is a greater level of government oversight in determining and capping pricing. In the U.S., it's generally up to private insurers to negotiate medication prices, reducing their negotiating power and allowing drug makers to set prices how they see fit."
This lack of regulation and negotiating power also allows drug companies to raise prices at their discretion. From January 2022 to January 2023, drug prices saw an average increase of 15.2%, or $590, per prescription.
2. Advertising
Another unique element of prescription medications in the United States is the heavy advertising by many drug makers. While drug advertising is commonplace in the U.S., it has been banned in many other countries. On the other hand, the total cost of pharmaceutical advertising in the United States for January 2023 alone was valued at $1.1 billion.
Advertising amplifies the demand for specific prescription medications, providing manufacturers with the leverage to escalate prices. Consequently, regardless of demand fluctuations, many manufacturers are compelled to hike prices to counterbalance their marketing expenditures.
3. High Insurance Cost Sharing
"Changes to the insurance market are another major factor that causes more patients to feel the strain of rising drug prices," Herfield notes. "Insurers are increasingly using methods like higher copays and deductibles to pass more expenses on to patients. While the insurance company still negotiates with the drug manufacturer to obtain a pricing discount, even people who have insurance are now responsible for a greater proportion of their drug costs than they were in the past."
Insurers frequently defend such measures as a method to discourage unnecessary healthcare utilization. However, elevated copays and deductibles for prescription drugs can swiftly impose a financial strain on individuals who rely on these medications to maintain their health.
4. Monopolies
According to a study from Blood Cancer Journal, the existence of monopolies within the prescription drug space is perhaps the most significant contributing factor to high drug prices. As the researchers argue, in cases of severe conditions such as cancer, necessary drugs are often designed with planned redundancy, preventing the emergence of generic alternatives.
In these cases, the medications are released with a patent that legally prohibits other companies from creating generic competitors. However, by the time the patent ends, the original drug is no longer considered the best treatment option because a new version with a new patent is released. If a competitor tried to make a more affordable, generic version, they could be successfully sued under patent law.
When only one company—or a select few manufacturers—can produce drugs for a specific condition, the lack of competition allows them to maintain high prices.
5. Lack of Comparative Research
Even when generic drugs are available, patients often aren't aware of the lower-cost alternatives that could help them—even when reducing costs is a top priority.
"All too often, people simply aren't aware that a viable generic alternative to a brand name drug is available," Herfield says. "Patients can be heavily influenced by advertising to ask for the more expensive brand-name drug. Even healthcare providers are often hesitant to prescribe less-expensive alternatives they aren't as familiar with because, quite often, these drugs haven't undergone medical research that compares their efficacy to the name brand version."
With comparative research often lacking, patients and healthcare providers must instead seek medical research on the efficacy of less-expensive drugs to determine whether they are viable alternatives to brand-name options.
How BuzzRx Can Help
While patients cannot directly lower the costs of prescription medication, resources like BuzzRx can help reduce their financial burden.
"BuzzRx provides a free prescription discount card and app that allows you to save up to 80% off prescriptions for both generic and brand name drugs," Herfield explains. "Our card is accepted at over 60,000 pharmacies nationwide, providing patients with an accessible solution that drastically lowers their prices. Sometimes, the discounted price is even less than what they might pay with their insurance. Our website and app also allow users to compare prices at their local pharmacies to find the cheapest option in their area."
Individuals can sign up to receive a physical BuzzRx card through a form on the company's website or download the app to start saving. As a free solution for lowering drug costs, this is a clear win for patients looking for better ways to manage rising prescription prices.
