Medicines are sold by retail pharmacies or by mail-order providers who purchase the drugs from wholesalers, who in turn purchase them from manufacturers, much as in a regular consumer market. This complexity is compounded by the structure of the health insurance market, which is more complicated for prescription drugs than for other aspects of health care.
Both new branded drugs and their generic competitors (drugs usually made by companies other than the original patent holder after the patent has expired) are subjected to the FDA's approval process. If approved, its subsequent use is monitored in order to identify any adverse effects that were not detected in the original approval process. Food and Drug Administration (FDA) for safety and efficacy. Before a drug is approved for use, it must undergo an extensive review by the U.S. government stringently regulates which prescription drugs are available for sale. While some drugs can be acquired “over the counter,” or without a prescription (which is how most other consumer goods are bought), the purchase of any medicine is considered to be potentially harmful and may warrant the approval of a clinician. Furthermore, a prescription drug may only be purchased under the supervision of a government-licensed pharmacist. Prescription drug markets are far more complex, beginning with the concept of a “prescription.” Both federal and state laws regulate consumer access to certain classes of drugs, requiring the approval of a clinician before the drug can be sold to the patient. Producers make or import products which are then generally distributed to wholesalers who resell them to retailers who make final sales to consumers who in turn pay the bills. Conventional markets involve relatively straightforward transactions with products and cash flows that can be readily traced. The biopharmaceutical sector 1 of the United States has a market structure that is more complex than any other sector in health care-and perhaps more complex than any other sector in the entire economy. The current high and increasing costs of prescription drugs-coupled with the broader trends in overall health care costs-is unsustainable to society as a whole. Therefore, any solution to the affordability issue will require considering all of these factors together. Affordability, however, is a complex function of factors, including not just the prices of the drugs themselves, but also the details of an individual's insurance coverage and the number of medical conditions that an individual or family confronts. Especially with the highly visible and very large price increases for prescription drugs that have occurred in recent years, finding a way to make prescription medicines-and health care at large-more affordable for everyone has become a socioeconomic imperative.Īvailability relates to the existence of certain types of drugs in the market place, and is alone not sufficient to control costs. The use of increasingly expensive prescription drugs is a significant part of this problem, making the cost of biopharmaceuticals a serious national concern with broad political implications. Total medical expenditures are rapidly approaching 20 percent of the gross domestic product and are crowding out other priorities of national importance. At the same time, however, the United States is facing the vexing challenge of a seemingly uncontrolled rise in the cost of health care. Thanks to remarkable advances in modern health care attributable to science, engineering, and medicine, it is now possible to cure or manage illnesses that were long deemed untreatable.