The Healthcare System and Pharmaceutical Prices in United States

Abstract

In the United States, pharmaceuticals are manufactured or distributed by many hundreds of companies, all in private hands. Prices of pharmaceuticals are set by manufacturers and there is no governmental involvement. Pharmaceutical products leaving the manufacturers factory are sent to wholesaler organizations or directly to the warehouses of chain pharmacy corporations, mail service pharmacies or to other large purchasers such as hospitals, clinics, and health maintenance organizations. Hospitals generally purchased their pharmaceutical products at lower prices than are available to community pharmacies. In order to get even lower prices, hospitals have joined together to form buying groups to obtain even lower prices by using their bargaining power. The significant and increasing health care expenditure forces private payers in the U.S. to start to request clinical and economic data from manufacturers to support coverage and reimbursement decisions. Economic evaluation measures efficiency of health programs or health technologies by comparing costs and outcomes across different alternatives. Techniques for economic evaluation include cost-effectiveness analysis, cost-utility analysis, and benefit-cost analysis. While economic evaluation focusing on efficiency, another technique, budget impact model, assesses the affordability of adopting a new program or technique. However, in order not to hinder patient’s access to care, it is prohibited by law to use the findings from health technology assessment such as cost-effectiveness analysis in coverage decisions for federal programs.