Type: Business
Pages: 4 | Words: 1126
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The rising prices of drugs have been an issue of concern for many people especially the poor for a long time. In countries such as the United States, the increase in prescription drug spending, has received a lot of attention, mostly from the media and the government. Many issues determine how much is spend on drugs; the choices made by doctors when prescribing drugs, the insurance covers provided by the insurance companies and government programs and most importantly is the way drugs are priced. This has therefore made drug spending to be a burden to many Americans, especially the old. This has affected the poor in many countries because they can not afford drugs at all. In the US prices for prescription drugs increased by 50% from 2002 to 2007, this was two and a half times faster than inflation. And because many pharmaceutical companies are in the US, these price overcharges therefore affect almost the whole world, especially drugs like those for AIDS. This paper will therefore look at the ethical implications of drug overcharging by the drug makers (Young, 2005)

High Costs of Drugs Affect Everyone

In the US the prices of prescription drugs have forced the government to intervene majorly because it affects mostly the senior citizens, a powerful political constituency. Medical costs in the US market are further shifted to the poor, uninsured, elderly and the many customers who pay cash for their prescriptions. Ordinary people in the US pay twice as much for the drugs from drug makers as compared to large insurance companies and health maintenance organizations. This is because the poor people are unable to negotiate for the same discount as the pharmacy managers from those big companies. This form of discriminatory pricing victimizes those who are not able to afford the drugs.

When this issue is looked at from another perspective, it is realized that the demand for pharmaceuticals as a consumer good, does not directly involve the drug makers.  This is passed on the doctors who prescribe the drugs, and mostly it’s the insurance companies and health services run by the government that pay for all the prescription. In this case consumers have no choice in selecting the drugs; instead they are forced to use what is provided by the government. This is seen as a moral hazard, which is the risk that one party to a contract will change their behavior at the expense of the other party once the contract is put in effect. This mostly affects individuals who are insured, insurance companies decide for them on what type of health care to take because they are not directly meeting the costs.

Cases of drug overcharging have come out in the many court cases that have been heard in the US. For example the case in a federal court ruled that Sandoz, a Novartis generics unit, had been overcharging Medicaid by almost 60,000% more than what it should have been. This means that the company was selling a pill that goes for $1 at a cost of $600 (Edwards, 2010). Another incidence is when the California Attorney General filed a suit against 39 pharmaceutical companies for overcharging the Medicaid program of the State. This was just one of the many action suits against pharmaceutical companies by states for systematic price inflation for their own gain. By this the company is denying the common people their basic life necessities (Medical news, 2010).

Drug manufacturers in New Delhi have also been accused for drug price hiking. Companies like Cipla, Ranbaxy, Johnson & Johnson and Dr Reddy’s Laboratories have been accused by the government for overcharging consumers on price-controlled medicines. This was after the National Pharmaceutical Pricing Authority (NPPA) carried out a research. The State of Illinois has also not been left behind on these. Its Attorney General has gone to court to accuse 48 pharmaceutical companies for fraudulently publishing inflated prices for prescription drugs rendering many people unable to meet their medical needs. The widespread increase in lack of ethics in the pharmaceutical industry has to be checked. These people seem to support any strategy that they see will bring them money. All these show that drug companies are determined to drain the economic life away from the people in any way they think is right. This is just a form of capitalism, what is called free market, free to the very people who have the means therefore seriously harming those who do not have the resources (Dey, 2009).

All these health problems paint health insurance as a financial rape. Pharmacists and doctors see the increasing number of medical cases as an opportunity for overcharging, making profit and carrying out fraudulent deals with drug makers. This is immoral; it is making profit on someone’s illness and misfortune. Price overcharging has become something normal to the drug making industries to the extent that they will do anything to oppose any move aimed at regulating this. This was seen when the Association of the British Pharmaceutical industry (ABPI) supported the big pharmaceutical companies’ fight against the South African government for trying to provide its citizens with affordable AIDS medicine. Afraid of losing profits, they sued the South African government for breaking international patent law. They put profits before the poor (Goldstein, 2009)


Many countries of the world have felt the impacts of price overcharging on drug by the drug making companies, especially the poor and developing country which can not afford to provide affordable medical care for their citizens. In the US, this is mostly felt by the elderly who are big consumers of these drugs. Governments have come up with measure aimed at providing these important services to their citizens. In the US most of these important services are in the private sector, the insurance companies, whose insurance policies again are too high for the poor, the elderly and the uninsured members of the society. Those who can afford, on the other hand, are not given a chance to medical care of their choice; the insurance companies dictate what they will have because the people are not involved directly in paying for the same. This is morally wrong and unethical. The pharmaceuticals might argue that the high prices are aimed at meeting the costs incurred in coming up with the drug, which is understandable, but they should also put in mind an individual’s life. A person’s life should come before profits. Doctors should concentrate on saving people’s lives; they should stop colluding with pharmaceuticals in their prescriptions. They should know that making profit on someone’s illness and misfortune is immoral and unethical. Efforts like the ones seen in the US, aimed at stopping these overcharges should be encouraged and other countries should also come out against it to protect their citizens from these opportunistic companies.

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