Case assignment Rising Cost of Prescription Drugs and its affect on Essay

Case assignment Rising Cost of Prescription Drugs and its affect on MEDICARE - Essay Example In order for pharmaceutical companies to lower prices they must take a totally different view to how profits are made and how future research and development can occur. Currently they take the approach that they have a twenty year patent in which to research, develop, market, and profit from a new drug. After this time generic manufacturers can legally sell their products and compete for customers. The companies that develop these drugs need to cover their costs and continue developing new drugs. Their profit schemes have worked so far, but times have changed. Big name pharmaceutical companies may be forced to change their pricing policies for one simple reason—competition of generics from developing nations, such as India and China, that deliver effective, cheap drugs. Reverse engineering of name brands and marketing of these generic drugs is projected to make these new players majorly influential in the drug market in years to come. According to Johnson (2009) â€Å"†¦ inclusion of noninfectious diseases, such as cancer, diabetes and heart disease, into this little- or no-profit scenario could undermine innovation for chronic diseases,† (Drug Industry’s Doomsday Scenario section, para. 3). The ugly truth is that the expensive process of researching and developing new drugs may force giant pharmaceutical companies to either delay research and development or take the risky avenue of trying to sell cheaper drugs for long term profits, neither appeals to them. With patents on existing drugs running out, generic bra nds are well positioned to seize as much market share as possible. It is only a matter of time before these emerging giants can acquire a profit majority and then break into the research and development arena as well. Demand for a product usually raises prices, and the market for medications is no different. According to Walsh (1999) â€Å"†¦the pricing of newly