46 g) Drug companies and the idea of a “free” market
U.S. Law Protects Drug Companies from Free Market
U.S. law protects these companies from free-market competition, and Medicare is not allowed to negotiate prices. By law, it has to pay exactly what the drug companies charge for any drug. The same goes for other insurance companies who simply do not negotiate.
In contrast, governments in other countries put caps on the price of drugs and negotiate prices based on what the actual therapeutic benefit is. And Big Pharma still turns a healthy profit in other countries, despite costs being 40 percent lower than they are in the United States.
In the case of almost every other product sold on the free market, the older a product gets the less it costs. In the case of cancer drugs in America, the inverse is actually true. Novartis developed Gleevec, one of the most popular cancer drugs, in 2001 and sold it for $28,000 a year. By 2012, its cost rose to $92,000.
Despite not being a novel treatment, Novartis is allowed to hike up the price every year in the United States.
The bottom line is that the US consumer is getting “soaked” by drug companies and we really do not seem to care.