Trouble with Cheap Drugs

The Trouble with Cheap Drugs

Why are prescription drugs so expensive? This and many more questions are answered in “The Trouble with Cheap Drugs,” an article published in The Economist on January 31, 2004. The main focus of the article is the European versus the American drug market and who actually pays more in the long run. The reasons can most directly be contributed to locations of research and development, transition of high valued pharmaceutical jobs, and how patients fare.

To begin with, the location of research and development plays a huge role in the cost of drugs. Research is not cheap and once a new drug is put on the market, the consumers who require such treatment quickly end up paying more than what is actually necessary. Currently most research and development is done in the United States due to the large market of possible patients and a quicker release time by the FDA. In Europe government restrictions and price controls delay the release of the newest drugs. Then by the time the drugs are able to be released, the brunt of the costs has already been paid for by Americans and thus Europe’s initial price is far less. In addition, the transition of high valued jobs is creating more potential revenue for America. The researchers are paid extremely well and when that money is taxed it goes to the country in which they reside. An illustration, Germany at one time had many of these high valued jobs, but they allowed the companies to merge or altogether leave, initially saving the country $19 billion. However, this savings was never truly realized, between the loss of jobs and the companies that housed them Germany realized a $3 billion loss. To move on, the status of patients that live in Europe is far less than those in America. Americans receive the newest and best treatments available far quicker, because in Europe the government has a firm grip on the release of new drugs. Due to Europe’s stiff regulations drugs are released almost one third more slowly than in America. In addition, the morality rate in Europe could be far less if the newest, most effective drugs were available faster.

This article was written to a vast audience mainly Europeans and Americans. Its purpose is to shed some light on to the cost of prescription drugs. While the author remains objective he does seem to believe that America has a better deal than Europe. For example the author asks these two questions: “Should Americans be angry? And should they force down drug prices at home?” Using this as the thesis for the article the author then expounds on each from two points of view. The Economist appropriately emphasizes all aspects of drug pricing and the reasons for it drawing