The Pharmaceutical Market Is Not A Price Regulated Market Essay

1519 Words Nov 12th, 2016 7 Pages
The pharmaceutical market in the United States is not a price regulated market, meaning the price of the drugs can be placed at any price without question. Due to the lack of regulation the pharmaceutical industry is the largest profit gaining industry in the United States market. Although this is great for the industry, it is not enjoyable for the consumers. Many Americans cannot acquire the medications they need to better their health because of the high costs.
The World Health Organization (WHO) noticed there was an issue and came together as a committee and proposed regulations that would help lower the costs of pharmaceutical drugs. These regulations to propose where to cut costs throughout the pricing process. WHO recommended the follow regulations: regulation of mark-ups, tax exemptions/ reduction for pharmaceutical products, and using the cost-plus formula.
Regulating the mark-up prices means cutting costs where the addition charges are added onto the price of the drug. The pharmaceutical companies add this additional cost on to gain greater profits which would later help with Research and Development (R&D). Implementing regulation of mark-ups into the system can have some positive and negative effects. The WHO panel has found the regulation stopped suppliers from adding on excessive charges to the drugs as it moved up the supply chain. Also, adding this regulation allowed for lower pricing for the consumers, which allows them to worry about their health more…

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