FIN 620 – Discussion – Prescription Drug Prices

Preparation:

1. Research corporate social responsibility actions of corporations.
2. Research Federal and State efforts to curtail increases in prescription drug prices in U.S. and other countries.
3. View the 3 Videos:
   1. Prescription Drug Pricing in U.S.
   2. Set F: Videos on Corporate Social Responsibility

https://youtu.be/E0NkGtNU_9w

https://youtu.be/ia3kcadITH8

https://onedrive.live.com/?authkey=%21AISpeBBt2Ksn…

Background:

Article 1 –

What’s behind the sharp rise in prescription drug prices? – CBS News

By DENNIS THOMPSON HEALTHDAY

Prescription drug prices are skyrocketingin the United States due in large part to government regulations, a new analysis finds. These regulations allow drug manufacturers to charge monopolistic pricesthat aren’t opposed by competing market forces, the researchers believe.

Drug makers charge high prices for drugs thanks largely to “market exclusivity” regulations intended to allow them to recoup the research and development costs for new breakthrough medications, said senior author Ameet Sarpatwari. He’s an instructor at Harvard Medical School and the Harvard T.H. Chan School of Public Health in Boston. The companies can do this largely unopposed because the nation’s largest health insurers — Medicareand Medicaid — aren’t allowed to negotiate prices, he added.

Those insurance programs cover one out of every three Americans, but under federal law must pay whatever price the drug makers charge.

Article 2 –

House approves drug price-gouging bill by Erin Cox, The Baltimore Sun

Under the legislation a drug price increase by more than 50 percent would trigger a report to the attorney general, who would have power to demand an explanation for the increase.

The proposed law also allows the state’s top lawyer to ask a judge to determine whether a drug company implemented an “unconscionable increase” to a critical prescription medicine. The measure allows a judge to fine the drug company, as well as order refunds to consumers.

Attorney General Brian E. Frosh sought the new authority.

The attorney general would be able to take action if the manufacturers of an off-patent or generic drug make an “unconscionable increase” in price under a bill that passed the House on a 137-4 vote. An “unconscionable increase” is defined as an excessive increase not justified by the cost of producing or distributing the drug. Supporters say Maryland would be the first state in the nation to make off-patent pharmaceutical price-gouging something state officials could take action against.

Discussion:

Is resolving this issue of price gouging for prescription drugs something for government versus business to address. You must select one side.

If Government,

1. Discuss pros and cons if addressed at a federal or state government level. Decide which government level (federal versus state) is most effective and why;
2. Discuss what mechanism or actions would be implemented by government;
3. Discuss expected response from actions taken by government from:
   1. CEOs of Drug Industry
   2. Employees of Drug Companies
   3. Shareholders of Drug Companies
   4. Consumers/Customers
   5. Other government level (if action taken by federal, how would state respond and vice versa).

If Business/Industry,

1. Discuss impact to business in terms of market dominance, competitiveness, profitability, and ability to recoup R&D efforts, if the government intervenes instead of the company addressing this issue;
2. Discuss what strategy the business can take to curtail price increases while making a profit and providing a quality product;
3. Discuss expected response from actions taken by business from:
   1. CEOs of competitor Drug company
   2. Employees of Drug Companies
   3. Shareholders of Drug Companies
   4. Consumers/Customers
   5. Government