Health care policy has played a major role in the rapid rise of prescription costs. Inflations can be caused by both fiscal and monetary problems. Medicine costs are affected by the concept of supply-demand. According to Ryan et. al. 2019, population growth has caused a rise of demand while supply has remained stable. This has lead to an increase in medication costs. Advanced technical knowledge is required to develop diverse pharmaceuticals. This results in expensive production costs, and therefore high drug spendings. Other issues include changes in the manufacturing process and increasing costs of pharmaceutical products.
American pharmaceutical products are in high demand. Patent protection for branded drugs has also increased the costs. The United States regulates some of the pharmaceutical products costs, just like other countries. This is done in order to create a favorable business climate as well as consumer protections (Hernandez and al., 2019). These drugs can lead to high drug costs if they are used excessively. Moral hazard, which is a concern for drug dealers, can also limit the market. Rising demand may cause a rise in the price of medicine units. Higher medicine costs can lead to lower medication adherence. This will eventually impact productivity and social welfare. The long-term effects of rising digging costs will be negative. Incentives and protection policies for consumers are two of the most important government interventions to lower medicine prices. Produces are protected against economic abuses. In order to protect the consumers and foster affordability, price regulatory agencies may help establish a price ceiling for all medicines.
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