How Pharmaceutical Companies Affect the Healthcare System

Topics: Food and Drug Administration, Pharmaceutical industry, Drug development Pages: 11 (4398 words) Published: March 26, 2012
How Pharmaceutical Companies Affect the Healthcare System
Yan Li, Ying Li, Nancy Nycum, Maria Rubi, Cristina Sanchez
Florida International University

Executive Summary
The Pharmaceutical industry has been around since the Middle Ages, and it has affected healthcare in many ways. The development of medicine and having a scientific approach, while being able to understand the human biology such as DNA, has helped achieve miracles. One of the most well known pharmaceutical companies Pfizer has grown since 1849 when it was founded, and they have taken great measurements to achieve success in this field (Pfizer, 2010). They invested much of their shareholder’s money to create penicillin at a faster rate to help war victims during the war (Pfizer, 2010). Although there has been a vast variety of competition in the 21st century, the pharmaceutical industry during the 20th century did not have much competition and doctors did not mind as much to pay x amount of money for drugs. Patients were not well informed, and counted on their doctor to provide them with the correct treatment (A Recent History, 2007). From the beginning of time this industry has helped patients live longer and has transformed healthcare.

The pharmaceutical company is made up of a number of different functions and departments. Each of these functions is given a responsibility in one area of the company’s activity. These departments are closely related and the success of the company is based on the ability of these functions to work together. The pharmaceutical companies rely on research and development to find new and innovation new drugs. In order for a drug to enter the market it must undergo a series of tests and clinical trials. There are phases the drug must go through and complete in order to meet the requirements of the FDA. The development of a drug is an ongoing journey, and it can take up to 12 years to develop a drug (Pharmaceutical Patents 2006). The pharmaceutical company uses patents so that other companies will not be able to use the drug. Patents expire 20 years from the date of filing, and once this patent expires generic drugs are able to reproduce the drug (Pharmaceutical Patents 2006). Robust patent protection is needed to guarantee innovation in pharmaceutical endures. The FDA regulates existing and new drugs through its enforcement of the Food, Drug and Cosmetic Act. Whether a drug is new or it is being altered in some way, the FDA must oversee the processes in order to ensure the safety and effectiveness of the drug. There are various required listings that are provided through the application and approval process by the Agency in order to know the status and history of the drugs; these are IND, NDC, NDA or ANDA. The FDA requires the pharmaceutical industry to pay fees in order to undergo the New Drug Development Process and any kind of alteration or deviation from the original approved drug. These fees can cost upwards of 1.8 million dollars per each new drug application and as little as 90,000 dollars for product fees. Each year there are about 130 new drug applications and much of the revenues collected from the fees return to the appropriate FDA centers for further technological growth. Pharmaceutical companies respond to consumer criticism regarding the high cost of prescriptions, that the high drugs prices are a result of the high research and development (R&D) cost. They hid the increasing price into the “black box” which means there is no transparency in it. This caused the conflicts between public and the drug companies. As the U.S. healthcare reform, the price keep going up and the conflicts will be aggravated unless enhance the transparency in the R&D cost. On March 21st, the House of Representatives voted 219-212 to approve the “Patient Protection and Affordable Care Act (PPACA).” Known as most as Healthcare Reform Legislation, the PPACA will bring both good and bad news for pharmaceutical companies....
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