Pharmaceutical Companies

Pharmaceutical companies are a big part of the healthcare industry. These companies produce medications that cure and treat illnesses and diseases. They also ultimately decide the cost of the medication. There are a lot of factors that contribute to the cost of medications that companies have to consider. 

There are a few different factors that contribute to the cost of medications. The first one is the patient population. The more people that have a certain disease cheaper the medications tend to be because there are more people to try and get the money spent producing the medication to market back from. Next is how much it took to bring the medication to the market. Pharmaceutical companies have to think about how much was spent on research and development, marketing, plus other things money was spent on producing their product. The contracting done with the government and insurance companies affects it as well. Carlon Burt, who works at a pharmaceutical company, said, "one of the things that is very different is your insurance plan and so cost is relative. Okay. Because... I might pay more money every month to have a better insurance plan than you and so I might think that my, you know, the cost of a medication is very affordable because I had paid more for my insurance." These are some of the main things that contribute to that. 

Another big thing involved with medication is patents. Before the Affordable Care Act, the amount of time a medication stayed on patent would vary. A generics company could also come in and say oh I could make this product for cheaper and that shortens the time a medication stays on a patent for the company that originally made it. So pharmaceutical companies were losing money. The affordable care act was going to change that so that pharmaceutical companies had 20 years to get their money back and make a profit on the medications before it came off patent. 

While medication can be very expensive and difficult to pay pharmaceutical companies to have programs in place to help reduce those costs for patients. As Carlon Burt said in an interview, "So every pharmaceutical company by law has to have a patient assistance program. Every single pharmaceutical company... have copay programs that will help reduce your cost, the actual cost of the patient." Now interestingly enough it's the insurance companies that will stop people from using these programs. This is because they want you to use generics because they make more money off of them.