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Top United States drug-makers like Pfizer and Sanofi are set to raise prices of their new drugs even as pharmaceutical companies face the prospect of reducing prices of high-cost drugs like insulin under the Biden Administration’s Inflation Reduction Act (IRA). It would appear that the rise in the new drugs is to set off the reduction prices of drugs dealing with widespread diseases like diabetes.

The finding is that of a research firm 3 Axis Advisors. It has also been reckoned that the US drug companies have made an annual increase of 20 per cent in drug prices. Many of the drug-makers have reduced prices of medicines which are used by people extensively for various widespread ailments.

This is a difficult dilemma for the governments and for the pharmaceutical companies. It is a fact that health care has become a nightmare for most people in the world’s richest country because of the rising prices. The reason Biden Administration felt compelled to intervene through control of drug prices was the spiralling cost of health care for the people.

Successive administrations, especially the Democratic ones, have been trying to address the issue. President Barack Obama had tried to reform the Medicare through making the insurance framework flexible, allowing the people to choose their insurance agent and not tied to any particular company.

But this did not prove to be of much help to the people who needed help, and it boosted the insurance companies. President Joe Biden took the other way of controlling the prices of drugs through the IRA. This has led to a different kind of response from the drug manufacturers. They have decided to make their new drugs costlier even as they reduced prices on drugs that are widely used. It can be seen as a quid pro quo. But it remains to be seen whether it is an effective response on the part of the drug companies.

Many of the drug companies including GlaxoSmithKline have been cutting the prices of drugs for asthma, herpes and epilepsy. Many other companies have already cut the prices of insulin drugs to avoid penalties under American Rescue Plan Act of 2021.

The law requires drugs prescribed through Medicaid to be rebated, and they cannot be more than the inflation rate. The fear of the companies however is that the rebate price would go lower than the net cost of the manufacture of the drug.

The big pharmaceutical companies have been on the radar for making enormous profits, disproportionate to the money they invest in research and development and in manufacture. But drug companies contest this. They argue that getting a new drug to the market requires a long gestation period, and many a time some of the new drugs turn out to be duds, and the research has to change track. And through their patents, the big drug companies hold a monopoly for 20 years where they can set their price and before the drug becomes a generic one.

But by the time a drug becomes generic it would have lost some of its effectiveness because by then a new generation drug based on advanced research would have hit the market. And the people who need the medicine would always have access only to a slightly out-of-date drug. The best medicine on the counter eludes the common people.There is then a hard bargain due between the government and the pharmaceutical sector, and it is not going to be an easy one. But the logic of bringing out the best therapy is self-defeating if it does not involve people who need them but only to people who can pay for them.