Patented Prescription Drugs Are Not to Blame for Rising Premium Costs

High insurance premium costs have impacted many Americans, and people are looking for someone to blame. Misguidedly, some people, including well-heeled special interest groups, have put the blame on pharmaceutical manufacturers and patented prescription drugs.

Yet, research into the healthcare industry shows that patented prescription drugs actually account for a small amount of overall healthcare spending while playing an irreplaceable part in the lives of American patients.  

Patents are essential to the pharmaceutical industry, as they encourage manufacturers to keep producing innovative cures and researching new medicines. Patents give manufacturers and researchers a profit incentive, which enables them to keep providing Americans with cutting-edge prescription drugs. Claims that patented medicines are the cause of rising premiums are completely off base and not backed by statistics.

Brand medicines account for fewer than 11 cents of the premium dollar, a significantly lower portion than what doctor visits, insurer administrative costs, and hospital costs make up. Research shows that hospital spending actually accounts for the largest share of insurance premium costs. Administrative costs necessary to running a hospital as well as those kept as profits account for a large portion of every premium dollar as well.

The infographic above fully outlines the cost breakdown of the premium dollar.

Patented prescription drugs account for a small portion of healthcare spending, and access to life-saving cures and new medicines could plummet if manufacturers have no incentive to produce.

Villainizing the pharmaceutical industry and disincentivizing the production and research of prescription drugs could have disastrous consequences for American patients.