Creating a Drug Pricing Policy to Promote Affordable Healthcare Access

This essay presents a comprehensive drug pricing policy designed to address the rising costs of prescription drugs and improve access to affordable healthcare. It identifies the objectives of the policy, including enhanced competition in the pharmaceutical industry, reduced drug prices, and lo...Read More

Running Head: DRUG PRICING POLICY
Drug Pricing Policy
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DRUG PRICING POLICY 2
Drug Pricing Policy
Introduction
Healthcare is a basic right of every individual regardless of any society constructed
development and indices narratives. Yet this right is not an affordable luxury for everybody to
enjoy. Given that there are huge differences of horizontal as well as vertical lines, individuals in
developing nations lack adequate facilities in the healthcare sector (Vernaz et al. 2016). Such
issues of availability of healthcare-associated facilities and access to such facilities are mostly
influenced by economic and social conditions as well as the healthcare policies in place.
Healthcare systems are considered as the regulatory mechanism for achieving health needs of the
public. World Health Organization stipulates that a well-functioning healthcare system needs a
educated and reliable information, vigorous financial systems on which to anchor health-oriented
decisions as well as policies, specialized and competent workforce and effective healthcare
facilities for the delivery of qualitative services and medicines. It has been established that health
plays a vital role in the determination of the human capital. Better care enhances the productivity
and efficiency of the labor force, thus, contributing in the improvement of growth indices and
human capital resources. A healthcare policy is defined as a set of regulations and rules which
are put into effect to aid in the operation as well as shape of delivery of healthcare. Healthcare
policy operates on a wide range of issues entailing chronic illness and disability, healthcare
financing, mental health, preventive health care, and public health. The paper will come up with
a drug pricing policy in healthcare.

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Objectives of the drug policy
The mission of the Drug Pricing Policy is to ensure that costs of prescription drugs are
minimized and reduced at an affordable level while the vision is to make sure that the country
achieves universal healthcare through affordable healthcare services.
1) Improved and enhanced competition in the pharmaceutical industry
2) Reduced prices of prescription drugs in the country
3) Lowered out-of-pocket costs of prescription drugs
4) Better negotiations in the pharmaceutical industry
The policy will approach the issue of drug pricing from a variety of angles, leveraging on the
current healthcare policies to advance smaller as well as more targeted changes in the present
and future developments, while teeing up with bigger systems which may need future legislative
or rulemaking actions (Fauer & Friese, 2019). The policy aims to improve competition in the
pharmaceutical industry. The policy will put measures to evaluate how the existing price and
programs reporting requirements can affect incentives in the market as well as the ability to
execute specific value-based arrangements. The policy will put measures and plans to increase
better negotiations in the pharmaceutical industry by creating options to introduce extra
competition and management under Part B of the profits by leveraging on the present policies.
The policy proposes measures for public participation on a variety of policy and operational
design questions and the potential effect on the beneficiaries and providers. The policy proposes
to reduce the prices of prescription drugs by looking at the implications linked to the incentives
under the present operating system. The policy seeks to come up with rules of restrictions on
rebate use and how the government can prohibit the utilization of rebates in contracts between
the manufacturers and sponsors (Verhoef & Morris, 2015).

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The Problem of Drug Pricing in the country
The current pharmaceutical market is featured by rising and high list prices enhanced
consumer out-of-pocket, as well as a new period of low competition experienced by the high-
priced drugs. Present developments and problems in the market entail a business model which is
built on opaque discounts and rebates which favor high prices. Thirty years ago, many
prescriptions which were filled at retail pharmacies were mostly cash transactions (Wilensky,
2016). After some time, nevertheless, healthcare system plans started to provide drug coverage to
compete for innovative and new members, recognizing the benefit could be provided at a
comparatively low cost. The complexity benefits, as well as the price linked to the prescription
drugs gradually increased during early 2000 in the country. For instance, in the united states of
America, spending in the drug sector increased between 11 and 18% as the volume, and the
prices also increased (O’Donnell, 2018). As more intricate and more expensive the drugs came
on the market, plans utilized formularies as well as copayments to manage the operation and
keep the costs of the drugs low. Manufacturers of drugs paid discounts and rebates to be
provided as preferred drugs having the reduced copays as well as with few drugs which were
excluded from the coverage.
High prescription drugs are relatively costly and present a complex challenge with impacts
for both the healthcare system in Australia and consumers. For instance, it is estimated that
spending on prescription drugs will increase at an average of 6.6% every year throughout 2019-
2025. High prices of drugs are linked to the market trends lack of competition, as well as patent
protections. Even though there are solutions which can be instated at the national level, most
states have taken it upon themselves to come up with certain prudent policies to alleviate and
remove the burden of high prices of prescription drugs. It should be noted that while there are

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measures that are being put in place to reduce the prices of prescription drugs, prices have on the
rise at an exponential rate over the years with the biggest issue being the market (Tenn &
Wendling, 2014). The pharmaceutical sector in Australia is mostly described as an oligopoly,
that is, a market that is dominated by a small number of big sellers, before restricting the amount
of competition. In an ideal and perfect world, generic counterparts would be able to come into
the market as quickly as possible; therefore, increasing competition as well as to reduce the drug
prices. Nevertheless, there are numerous practices which have prevented competition in the
market — some of the major one being patent extenders, exclusivity, as well as pay-for-delay.
The Contributing Factor to Increased Prices of Drugs
The Drug and Food administration provides exclusive marketing rights for the drug
approval, which usually differ from patent life. There are exclusively four types of drugs, that is,
pediatric, new chemical, drug orphan, and others. Exclusivity can last anywhere depending on
the category on which the drug falls from 6 to 7 months, that influences the degree of
competition and innovation in the market. Patent extensions have also been stated as affecting
competition. Market me-too drugs are one method which is linked to patent extension (Stecker,
2018). Such types of drugs have similar formulations to their predecessors yet are advertised and
sold as being more efficient. Because the drugs fall under the same patent, generic counterparts
are blocked from entering into the market. Furthermore, in addition to inadequate competition in
the market, the pharmaceutical industry supply chain is very complex and dense that even if the
customers are purchasing relatively cheaper drugs, they might not realize the positive variations
in their pockets because of the price variability.
An empirical study has tracked the funds flow across the pharmaceutical supply chain
and discover that over $1 in every $6 in prescription drugs spending goes towards

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pharmaceutical industries’ profits, thus, requiring more competition in the market. High drug
prices in the market negatively impact consumers and the people as well as their health outcomes
because of the inability to purchase medications. A recent study has shown that most of the
people in Australia across the political, social and economic continuum consider costs for
prescription drugs to be unreasonable and has been a top priority for the country. A survey
carried out in the country revealed that 1 in 4 of those using a prescription drug cut pills or
skipped doses in half because of the costs. The statistics and the data are particularly troublesome
for the people having chronic conditions. Since Australians have to decide between other
expenses and food or their medications, high costs of prescription drugs also contribute to the
overall higher health care system costs through unnecessary emergency services, hospitalization
as well as physician visits (Marciarille, 2017).
The trend is also applicable to the players. In the united states of America, A report has
found out that generics contributed about $266 billion to savings across players. Savings for
Medicaid and Medicare resulted in $83 billion and $41 billion, respectively. This translated to an
average $1953 for every enrollee of Medicare and $567 for every enrollee of Medicaid (Jones,
Linas, Truong, Burgess & Lasser, 2019).
How the Policy will be executed
This policy will focus on the price gouging, enhanced transparency as well as regulating
pharmacy benefit managers (Kouvelis, Yixuan & Nan, 2018). Normally transparency policies
will be formulated to target either the insurers, pharmacies, or the manufactures. In some
instances, pharmacists will be needed to dispense to the reduced priced generic while insurers
will be expected to file rate increases as well as the total expenditure by the government. The
manufacturers will be expected to offer cost justification to the relevant government agency such

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as the office of the attorney general. The law will allow the attorney general to come up with a
list of prescription drugs as the percentage of the wholesale acquisition cost of the drugs
increases and provide the list to the public (Gudiksen, Brown, Whaley & King, 2018). The
policy will require the national assembly of the nations health policy to track the price gouging
bills that allow the government to take legal action as well as impose financial penalties on
manufacturers who gradually increase their drug prices over the laid down specific periods. The
policy has taken into cognizant and recognized that there had been attempts by the government
in their previous lawmaking sessions to pass price gouging practices. There has been uproar and
backlash from the self-interested players as to what this can do to the market trends because
prescription drugs are managed as well as sold via a national market area instead of the regional
marketplace.
While the pharmacy benefit managers are meant to negotiate reduced costs of the drugs
with the manufacturers on behalf of the people, those savings normally do not trickle down to the
benefit the people. The drug pricing policy will ensure that pharmacy benefit managers disclose
their practices which are aimed at keeping the prices at an affordable level. The practices will
include rebates provided to manufacturers for enabling pharmacists to debate cheaper
alternatives with the people (Feldman, Frondorf, Cordova & Connie, 2017).
Expected impact of the drug pricing policy
The government has taken various actions to enhance competition and stop the gaming of
the process in regulation which has the potential to keep the prices of the drugs artificially high
or hinder branded, biosimilar, or generic competition (Applied Clinical, 2018). The policy will
ensure that relevant agencies in the country like the food and administration agency accelerate
the approval of generic drugs. Empirical studies have shown that higher generic competition is

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linked to reduced prices of prescription drugs. The policy will empower the agencies to publish
names of drugs having lower or no competition to come up and allow new entrants who will
eventually reduce the prices of prescription drugs. The policy expects to approve over 1000
generic drugs which will be best in the history of the country. The new approved generic drugs
will save the public as well as the government financial expenditure. Drug competition action
plan will be created and established under the drug pricing policy. This plan is expected to allow
the public to access to more affordable drugs by emphasizing on the three vital areas of the
policy; that is, enhancing the efficiency of the development of the generic drug, approval and
review process, maximizing the regulatory. And scientific clarity in tandem with intricate generic
drugs, and bridging the loopholes which enable brand-name industries to ‘game’ food and drug
agency regulations in ways which forestall the generic competition intended.
The policy will direct the relevant healthcare agencies to prioritize their reviews of the
applications of generic drugs, that is, guidance and guidelines will be established to enhance
efficiencies in the review, development as well as the approval process for the generic drugs
entailing intricate generic drugs. The policy is expected to facilitate opportunities for improved
sharing of information between doctors, patients, manufacturers and insurers with the view of
enhancing client access to healthcare products, entailing via value-based insurance. In the
negotiations with various stakeholders in the pharmaceutical industry, the policy is expected to
create changes in the prescription drug program which will enable for substitution of generic
drugs onto the formularies (Mee-Hyun et al. 2015). The policies are expected to create programs
which are designed to address the challenges of abusive drug prices by the various manufacturers
in the country by coming up with an inflation restriction for reimbursement of the available
drugs, minimizing wholesale acquisition cost-based payment. The policy is expected to

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modernize the healthcare program in the country, a portion in which entails the exclusion of
discounts by the manufacturers from the calculation of out-of-pocket of the beneficiary in the
healthcare system program (Daks, 2019).
It should be noted that every individual in the country have the right to know and
understand what their prescription drugs will cost before getting the pharmacy or getting the drug
(Kanski, 2019). Many individuals mostly abandon their drug prescription at the pharmacy when
they realize that the prices of such drugs and many people are never informed on the options of
the costs of the drugs.
Compliance and awareness of the policy
The policy will be disseminated to the public, and the relevant stakeholders through publication
in the government published documents as well as in the schedules. Ministry of health in the
country will initiate a country-wide awareness campaign to educate the public concerning the
drug pricing policy. This will be done in various healthcare centers ranging from the those in the
cities as well as those in the remote and rural areas of the country. Awareness campaigns will be
also be done in all learning institutions, especially in the nursing-related institutions. The
government will also use various media platforms like social media, televisions, radio,
newspapers and even government journals. Since social media is one of the most used interactive
media in the world, the government will use various social media platforms like Twitter,
Facebook, YouTube, and Instagram to reach every member in the country. One of how the
government will ensure that the policies will be effectively implemented and executed will be
through pharmaceutical industries integrating the objectives of the policy in their culture.
Pharmaceutical industries will be required by the government to have in place human resource
which is an expert in drug pricing regulations. The expert is to advise the various manufacturers

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to regulate their drug pricing about what the government has put in place (Kirzinger, 2018). The
government will reinforce its regulating agencies in the Food and Drug authority in ensuring that
the policy is implemented and executed in all corners of the country to ensure equitable
healthcare resources is achieved (Karralli, Tipton, Dumitru, Scholz & Masilamani, 2015). In
areas where there is limited access to healthcare especially in the rural and remote areas, FDA
will deploy more resources especially human resource to tackle to ever-increasing prescription
drug prices.
Conclusion
Prescription drug prices have been increasing hindering the availability and provision of
universal healthcare to the public (Boerner, 2015). Presently, there are very few policies which
have been formulated to reduce or lower prices of prescription drugs (Bach, 2015). Drug pricing
policy will strive to reduce the exploitation of the pharmaceutical manufacturers who enjoy
monopoly and charge exorbitant prices of the prescription drugs.

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