As stated previously on the statistics tab, medicines account for a very small percentage of healthcare spending. The U.S. relies on a competitive market to control costs while still encouraging new studies and new therapies. In contrast, other countries tend to have price containment which ultimately hinders the advancement of research and treatments. Countries that seek price containment wait much longer for lifesaving drugs than the U.S., there have even been instances where patients wait nine years for access to lifesaving drugs. The U.S. leads the way for best drugs and innovative technology and this is due to a competitive market. An open market allows for companies to compete for the invention of the next innovative drug, these companies can then sell their product and use the profit to improve technology. A competitive market keeps costs in normal range because a consumer will take their business elsewhere if there are lower prices at a different company.
To put this into perspective, the five year survival rate for all cancers is 40% higher for men and 13% higher for women in the U.S. than in Europe. These higher cancer survival rates are credited to the access of medications. To further this argument, between the years 2000 and 2005, 73% of drugs hit market in the U.S. before Europe, this is due to the competitive marketplace.
The U.S. spends a lot of time and money on new research and technology specifically, clinical trails. It is a process to get drugs approved and then to market. The entirety of the trials and approval takes about 10 years just for one drug. This is the most intensive part of the process and consumes a mass amount of money. Exclusively in Rhode Island, the state funded 341 clinical trials in 2013. There was a total of 38.5 million USD invested into these trials, so it is clear that when drugs are not approved these companies lose out on a lot of money. If drugs do make it to market, they are priced so that the companies will make their money back faster so they can circulate the money back into research and manufacturing (PhRMA). Further, other countries spend a lot less money on research than the United States, crippling the invention of lifesaving drugs. For example, the Canadian Cancer Society is one of the largest funders for cancer research and they spend about 500 million USD on an annual basis (Cancerprevent.ca). In the U.S. however, The National Cancer Institute spends an annual 100 billion USD on research and technology (National Cancer Institute). It is evident that there is much more money and time at stake in the U.S. rather than countries whom do not fund as much research. Therefore, list prices of drugs in the U.S. tend to be higher because companies need to make more of a profit in order to continue the research and manufacturing of medicines.
An open market where prices are not capped can at first seem immoral but, a competitive marketplace allows for prices to stay in normal ranges, accessibility of drugs in a timely manner, and encouragement of research.