The American Healthcare system has a history of chaos and unruliness. Despite the recent implementation of the Patient Protection and Affordable Care Act (commonly called the Affordable Care Act or Obamacare) costs of pharmaceuticals continue to rise. In addition to the spiraling costs of the health care system, pharmaceutical companies continue to benefit from high profit margins while Americans are left paying three times as much for the same medications as other nations across the globe (Picchi 2015). In order for the Obama Administration to achieve their goal of healthcare for every American, legislation must be implemented that allows price negotiation among medical providers, the federal government and the pharmaceutical companies.
Despite the persistent claims by many high ranking elected officials, such as former Senate Majority Leader John Boehner, that America has the best health care system in the world, there's insufficient evidence that Americans are getting higher-quality medical treatment or enjoying healthier lives than our counterparts abroad (Jacobson 2012). According to the Commonwealth Fund, Healthcare in America costs more than in other industrialized nations and Americans aren't getting the world's best care for their dollars, according to a new study. The United States spent $7,960 per capita on health care in 2009, the most of 13 industrialized nations in the Organization for Economic Cooperation and Development. That's almost three times the amount spent in Japan, which has the lowest expenses of the countries reviewed (Leflar 2013). Americans pay the highest prices for physician visits, hospital treatments and prescription drugs and get expensive diagnostic tests like MRIs at a higher-than-average rate. In addition, the U.S. still leaves tens of millions of its own citizens without health coverage, and will continue to do so even a decade into the implementation of Obamacare (Stein 2014).
Escalating prices for medications and high use of potentially wasteful, unnecessary and inefficient medical services and drugs are the main reasons for the rapidly escalating cost of health insurance, and the fiscal burdens of Medicare and Medicaid. Big price tags for prescription medication also lead Americans, even those with health insurance, to go without the care they need. The latest data from the International Federation of Health Plans, an industry group representing health insurers from 28 countries including the United States, illustrates how American patients pay the highest prices in the world for a variety of prescription drugs and common procedures like childbirth and overnight hospital stays (Young 2013). For example, Copaxone a drug prescribed to treat multiple sclerosis costs on average $862 for individuals residing in England. The same drug costs $1,191 in Spain, but then jumps to an average of $3,875 for individuals being treated in America. The same is true for more commonly prescribed medications such as Celebrex. This drug is commonly prescribed for pain and costs only $51 in Canada, but averages $225 per prescription in the United States, with Celebrex in the 95th percentile costing upwards of $461 per prescription (Graphs attached 2013*).

*I have attached graphs to this paper showing pharmaceutical costs among US and other countries

Americans spend more for health care largely because of overpriced pharmaceuticals. Most other industrialized countries have some form of central body that negotiates prices with hospitals and drug manufacturers. Tom Sackville, chief executive of the International Federation of Health Plans, who used to work for Britain's health care system, stated that Parliament has a unit of 14 people whose entire job consists of getting drug manufacturers to give the country a better deal on prescription medications. As Vox writer Sarah Kliff states, “That unit of 14 is essentially buying in bulk for a country of 63 million people – and can successfully ask for steep discounts in return” (Kliff 2015). The United States doesn't have any type of agency to work with Pharmaceutical companies. Every insurance plan negotiates individually with hospitals, doctors and individual pharmaceutical companies to set their own prices. Insurers in the United States don't get a bulk discount. Instead, America’s fragmented system means that Americans pay more for every type of health care that the International Federation of Health Plans measured. "You could say that American health care providers and pharmaceuticals are essentially taking advantage of the American public because they have such a fragmented system," said Sackville. "The system is so divided, it’s easy to conquer" (Kliff 2015).
Many Americans believed that the passage of the Affordable Care Act would put an end to the fragmented system, however for helping get the law passed companies were awarded price control. Lobbyists beat back proposals to allow importation of low-cost medicines and to have Medicare negotiate drug prices with companies. They also defeated efforts to require more industry rebates for the 9 million beneficiaries of both Medicare and Medicaid, and to bar brand-name drug makers' payments to generic companies to delay the marketing of competitor products. In 2009 Big Pharma agreed to contribute $80 billion towards Obamacare, largely by expanding the Medicaid discount to 23.1% from 15.1%. They also agreed to mark down prescriptions for seniors by 50% above a certain level. In return the White House agreed to spare the drug companies from central planning such as allowing the Health and Human Services Department to “negotiate” lower drug prices (Osiecki 2015). Ramsey Baghdadi, a Washington health policy analyst who projects a $30 billion, 10-year net gain for the industry. "I don't see how they could have done much better." Costly brand-name biotech drugs won 12 years of protection against cheaper generic competitors, a boom for products that comprise 15 percent of pharmaceutical sales. The industry will have to provide 50 percent discounts beginning next year to Medicare beneficiaries in the "doughnut hole" gap in pharmaceutical coverage, but those price cuts plus gradually rising federal subsidies will mean more elderly people will purchase more drugs.
But that was then. The Obama Administration’s new budget now claims to be “deeply concerned with the rapidly growing prices of specialty and brand name drugs” and it is rescinding the price-fixing reprieve (Osiecki 2015). It is essential that Congress support a bill that will institute a department, most likely a branch off of Health and Human Services, to negotiate prices with the pharmaceutical companies and repeal previous legislation that allowed insurance companies to individually negotiate with hospitals, doctors and individual pharmaceutical companies that set their own prices. This department should be based off the European model. Take Germany for example. In Germany for pharmaceutical companies, there are six steps in the process. After about six months of internal assessments, companies set the price for new drugs. That price becomes the starting point for negotiations with regulators. Companies must file a dossier with the Federal Joint Committee, the German body that makes drug reimbursement decisions, to prove the new medicine is better than comparable drugs already on the market. If it fails that test, the drug gets priced like existing ones. This often means a considerable discount. For example, Brilique known as Brilinta in the United States (made by AstraZeneca) currently sells for about 22 percent more than Plavix, an older blood thinner. If a new medicine can clear that qualitative hurdle, price talks start between the pharmaceutical company and the public insurers, that operate via the federal government, that cover some 90 percent of Germany's population to negotiate a rebate to insurers on the original price (Connolly 2011).
There are costs and benefits to this large scale piece of reform. One of the main benefits of lowering the costs of prescription medication is more affordable insurance coverage for Americans. More affordable coverage will also lead to an increase in insured Americans which was the original goal of the Affordable Care Act. This reform would also establish a more competitive pharmacy sector and greater investment in new medicines and patient support services. The main cost would be a shortage of revenue for pharmaceutical companies, however the marginal profit rate for most Pharma groups is wide enough that the companies would not experience bankruptcy. Many of these company’s sell the European nations at much lower costs and still turn a profit.
The prospects of the reform becoming law are complex. Many scholars argue that due to “institutional corruption” pharmaceutical reform laws will never pass or they will not be implemented. The term, "institutional corruption," does not refer to any violation of existing rules or laws. Rather it refers to a certain kind of influence, within an economy of influence that weakens the effectiveness of an institution and/or weaken public trust in that institution (Rodwin 2013). Published in the Journal of Law, Medicine, and Ethics, Marc Rodwin a Law Professor at Suffolk University states that within the pharmaceutical industry, institutional corruption occurs at three different levels. The first is through lobbying efforts and political contributions. This way, the pharmaceutical industry has influenced the US Congress to enact legislation that has severely undermined the stated mission and function of the Food and Drug Administration (FDA). The second level is through the application of industry pressure. Rodwin states, "Congress has underfunded FDA enforcement capacities since 1906, and turning to industry-paid "user fees" since 1992 has biased funding to limit the FDA's ability to protect the public from serious adverse reactions to drugs that have few offsetting advantages.” And on the final level the pharmaceutical industry is commercializing the role of doctors and undermining their position as “independent, trusted advisers to patients (Rodwin 2013).
From an opposite prospective, in 2015, national media started talking about prescription drug prices due in part to Valeant Pharmaceuticals. This drug company acquired a pair of drugs and increased their prices by 525 percent and 212 percent. Months later, Turing Pharmaceuticals acquired the rights to a drug and raised its price from $13.50 per pill to $750 (Pierson 2015). National media ran with the story, and presidential candidates vying for spots in primary polls spoke out on the issue. Every presidential candidate announced plans for reducing drug costs. By November, Valeant sold the rights to its drugs back to the former owners, and Turing promised to commit to price reductions. Also during November, Democrats in the U.S. House of Representatives announced the formation of a task force to combat the rising costs of prescription drugs, and the Senate Special Committee on Aging began an investigation into the increase in drug pricing by Turing, Valeant Pharmaceuticals and two other companies (Llamas 2015).
Due to the rising cost of pharmaceuticals in the United States and a failed policy created by the Affordable Care Act, legislation must be created in order to establish a department connected to Health and Human Services that can negotiate prices with the drug companies. Creating a six step process, modeled after European nations, the United States can lower the prices to be more reflective of the International average. Due to recently sparked debate among the media, 2016 presidential candidates have taken a stand against outlandish drug prices and reform centered on the pharmaceutical industry is now possible within the next five years.

Works Cited
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