If there’s one thing everyone in the U.S. Knows, it’s that high drug prices are as American as apple pie. Even though the U.S. Leads the world in biomedical innovation, the products of those advancements are more expensive on our own soil than anywhere else in the world. Social media is rife with people from Europe, Canada, and Japan (just to name a few) expressing pity for Americans who seem to spend an arm and a leg to get the same medicines they enjoy for cheap or even for free. And honestly? It isn’t fair.
In this chapter and the next, you’ll gain a better understanding about why drugs are priced the way they are. We’ll explore important questions like:
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How do drug companies determine what to charge?
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Who is responsible for setting the price you pay at the pharmacy counter?
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How expensive is too expensive?
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What’s stopping companies from just charging whatever they want?
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Why are drugs more expensive in the US than elsewhere?
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Does that mean the lower prices are the right prices?
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Do drugs stay expensive forever?
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And (this one is important) expensive for whom?
Drug-pricing is a complex topic, and we aim to share objective facts as well as articulate our particular perspective on things. It is important that you understand both the objective realities of how the system functions, and be able to articulate the logic of our perspective. We welcome your views, questions, and comments as well (rau@racap.com). So let’s get started!