Price Gouging In The Pharmaceutical Industry: A Set Of Reasons
Does anyone you know have severe allergies or diabetes? These two health conditions are managed completely using pharmaceutical drugs that are readily inaccessible due to the gouging prices. The cost of pharmaceutical drugs is an issue that every person faces on a day to day basis. Things like insulin and epi-pens which are essential to people’s daily functioning and survival often face the issue of inflation due to the high demand and lack of generics available making it an easy way for monopolization to occur. There are three issues that contribute to this being the lack of regulation on pricing, lack of alternative medication, and the last being the fact that people are left with no choice than to pay due to them being essential to their survival. Pharmaceutical drugs are high in demand, which is what feeds the rising prices due to people having no other choice but to pay the price.
The first major concern of pharmaceutical drugs such as insulin and epi-pens is the fact that there are little to none regulations on what companies can charge the consumer. According to Alex Ren “Since they are legally permitted to charge people as much as they wish for their products, pharmaceutical companies attempt to justify their high prices by arguing that the research and development (R&D) that goes into creating important drugs has created extensive costs that require substantial revenue in order to see a return on investment.” In business, we see how the above quote is seen in supply and demand due to the product being essentially one that the consumer cannot live without which justified makes the product “priceless” meaning that the consumer is willing to pay whatever price due to their need. This is a prime example of capitalism in play due to the producer taking advantage of the needs of the people to gouge the prices. Using things such as health and wellness is a very good way to ensure something will succeed to it being an indispensable part of people’s way of life. Necessity adds real value to the consumer which is what keeps the industry growing so significantly. In business you often have to make decisions about sales despite the morality issues that come with using people’s weaknesses to grow. Despite moral issues the economy must grow and this has allowed for a successful and fastly growing pharmaceutical market to flourish.
Generic alternatives often contribute to a vaster market and more competitive markets. Prices tend to be more affordable when there is an alternative involved but in the event of there not being an alternative, there is nothing that stops the producer from having to compete for price therefore companies monopolize to a certain extent to allow them to keep the reign of profit. There are no laws in place to put caps on the amount that companies may charge, this is part of America’s view on democracy and not getting involved in private sectors. We see this even still recently in 2018, there was finally an approvable for a generic EpiPen since they were dominating the industry they skyrocketed their prices because no one could produce what they had. In supply and demand we see that when there is only one product that everyone needs, it’s readily inaccessible due to quantity, and price is inelastic. The pharmaceutical industry is inelastic as a whole and is what continues to drive the price gouging.
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