The United States has the highest health care expenditure among the developed countries. A study conducted in 2016 showed that the country uses approximately 17.8% of its gross domestic product (GDP) on healthcare (Papanicolas et al., 2018). The cost of drugs remains one of the reasons why healthcare costs in the US are bloated. Several reasons explain why drug prices in the US are high including research and development, monopoly, and the emphasis on the use of the brand name drugs over the generic forms (Kesselheim, Avorn, & Sarpatwari, 2016). The high cost of drugs has adversely affected the provision of healthcare in many hospitals. Many patients are unable to afford the medications while some health insurance companies have failed to cover certain types of medications due to their costs. As a solution, hospitals should focus on altering their supply chain to focus more on generic drugs rather than the much-expensive brand names.
It is without a doubt that the overreliance on the branded medication has contributed to the high price of healthcare in the US. Ballreich et al. (2017) say, “High levels of spending for branded prescription drugs have once again captured the concern of U.S. patients, clinicians, payers, and policymakers.” The supply chain of many hospitals has focused on the use of branded medication. Branded medicines include a set of drugs which bear the company name for the sake of advertisement. Research has shown that branded medications cost approximately 30% and 90% higher than their generic counterparts (Paul, 2018). Despite the high costs of the branded medication, it is crucial to appreciate that the generic medicines have the same active ingredients, salts, and medical impact on an individual.
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The obsession with the brand name drugs in American hospitals has played a critical role in the increased healthcare costs thus locking out many individuals from receiving much-needed care. There is a fallacy among people and the entire healthcare system that the use of branded medications could result in better outcomes for the patients. However, this is not true. The branding of drugs is purely for commercial reasons and has nothing to do with the overall outcome of the patient. Brand makers usually take credit for inventing the drug. As the pioneers, they have often spent huge amounts of money in the research and development. Therefore, the high prices reflecting on the drug seeks to cover their large expenditure. It is therefore imperative for hospitals to come with this realization and change tract in their supply chain (Das et al., 2017).
Therefore, as an operation manager, the focus will be to ensure that the healthcare facility remains sustainable in its operations. The first step will be to create partnerships with the generic providers of drugs and cancel any pending business with branded companies. Such a decision will be based on research and evidence because the branded and generic drugs have the same active compounds. Such a decision will be beneficial for various stakeholders. For the patients, it will reduce hospital costs and ensure that they continue receiving affordable drugs with the same effect as the brand names. Secondly, the hospital will benefit because it will cut on its costs while at the same time maintaining the required standards of healthcare. Overall, this will be a wise business decision that will enhance efficiency, cost-effectiveness, and reduce the unnecessary barriers to health that are created by costs.
References
Ballreich, J., Alexander, G. C., Socal, M., Karmarkar, T., & Anderson, G. (2017). Branded prescription drug spending: a framework to evaluate policy options. Journal of Pharmaceutical Policy and Practice, 10(1), 31.
Das, M., Choudhury, S., Maity, S., Hazra, A., Pradhan, T., Pal, A., & Roy, R. K. (2017). Generic versus branded medicines: An observational study among patients with chronic diseases attending a public hospital outpatient department. Journal of natural science, biology, and medicine, 8(1), 26.
Kesselheim, A. S., Avorn, J., & Sarpatwari, A. (2016). The high cost of prescription drugs in the United States: origins and prospects for reform. Jama, 316(8), 858-871.
Papanicolas, I., Woskie, L. R., & Jha, A. K. (2018). Health care spending in the United States and other high-income countries. Jama, 319(10), 1024-1039.
Paul, S. (2018). Why do branded medicines cost 30%-90% more than generic medicines? Healthworld.com https://health.economictimes.indiatimes.com/news/pharma/why-do-branded-medicines-cost-30-90-more-than-generic-medicines/64644960
