A few years ago Martin Shkreli become famous for purchasing a little known medication called Daraprim and raising the price from $13.50 to $750. According to Webmd, the drug is a very niche product that helps “to treat a serious parasite infection (toxoplasmosis) of the body, brain, or eye or to prevent toxoplasmosis infection in people with HIV infection”.
Although many around the nation called foul on Shkreli for raising the price by 56x over night, the bigger issue is how common a practice price hikes are within the healthcare industry. The business model of most Healthcare conglomerates is to purchase a niche drug needed by a specific set of patients with zero options outside of the medication. Usually a drug affecting a couple thousand is pinpointed, purchased, and the price is hiked in an effort to maximize profits. With insurance providers and government health systems like medicare footing the bill, no one bats an eye. But with these business models, smaller firms are unable to compete due to application fees for creating these drugs.
According to Small Business Trends “Sen. Susan Collins recently proposed legislation that would waive application fees for small companies that want to manufacture certain types of drugs in an effort to spur more companies to compete.” This is fantastic and would allow small businesses to make huge profits developing medications for patients while charging half the cost. Although the legislation won’t pass overnight, it is an excellent starting point for decreasing healthcare costs for patients and for the average American citizen.
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