The Business and Ethics of Drug Pricing: A Growing Concern in Modern Healthcare

By Prisha Bhattacharjee

Introduction

Although access to life-saving medications should be a fundamental right, the pricing of prescription drugs often feels more like a business strategy than a healthcare necessity. For patients and their families, the cost of medicine can play a major role in determining whether they can afford treatment. While the scientific innovation and research that go into creating new drugs are important factors in pricing, the way pharmaceutical companies set and market their prices can significantly influence patient access and public perception. In today's complex healthcare environment, drug pricing strategies, public opinion, and government regulations each play a critical role in shaping the pharmaceutical industry. However, many companies fail to fully recognize the long-term ethical and business consequences of their pricing decisions. In this article, we will explore the impact of drug pricing on patients, analyze the ethical concerns raised by current practices, and examine how businesses in this sector can work toward more responsible and sustainable models.

Overview

In today's healthcare system, drug pricing has become one of the most debated and scrutinized aspects of medical care. Studies show that Americans pay nearly two to three times more for prescription drugs than citizens in other developed countries (1). This highlights a broader trend where profit-driven motives can often overshadow the original intent of improving public health. Research and development (R&D) costs are frequently cited as the primary reason for high prices, and it's true that developing a new medication can cost billions. However, analysis from organizations like the Congressional Budget Office has shown that R&D expenses do not always align with the final price tag of many drugs (2). Instead, pricing is often influenced by market demand, lack of competition, and the willingness of insurance companies and government programs to cover those costs. For patients, this system can create enormous financial strain, forcing some to ration their medications, delay treatment, or even forgo it altogether. In many ways, the price of a drug becomes just as important as its effectiveness—if not more so—for the average patient trying to access care.

When it comes to the business side of pharmaceuticals, pricing is a carefully calculated strategy. Pharmaceutical companies invest heavily in marketing, patent protections, and legal battles to keep competitors at bay and maintain exclusivity over their products. The longer a company can keep a drug free from generic competition, the longer it can charge premium prices (3). Additionally, drug companies often employ "evergreening" tactics—making slight changes to a drug's formula or delivery method—to extend patents and delay the introduction of cheaper alternatives. While these strategies may make sense from a business standpoint, they raise important questions about fairness and accessibility. In fact, a 2022 study published in Health Affairs found that over 60% of new drugs entering the U.S. market were priced at over $150,000 per year (4). This level of pricing is simply not sustainable for patients or healthcare systems. And yet, due to the way insurance and rebates are structured, companies often justify these high costs, arguing that they offer discounts behind the scenes. However, for many uninsured or underinsured patients, the sticker price remains a daunting, sometimes insurmountable, barrier.

In other words, while drug pricing strategies may boost short-term profits and satisfy shareholders, they can ultimately damage the long-term trust between pharmaceutical companies and the public. Companies that fail to consider the broader social impact of their pricing policies may find themselves facing increased public backlash, regulatory scrutiny, and reputational harm—three things that no business can afford to ignore in today's socially conscious marketplace.

Ethical Implications

Beyond the dollars and cents, drug pricing carries serious ethical implications. Life-saving treatments should not be treated like luxury goods, accessible only to those who can afford them. Yet, stories of patients dying because they couldn't afford insulin, or families crowdfunding for cancer drugs, have become all too common. According to a survey conducted by the Kaiser Family Foundation, nearly 30% of Americans report not taking their prescribed medications due to cost (5). This reality reveals a troubling disconnect between the mission of healthcare and the actions of some pharmaceutical businesses.

From an ethical standpoint, companies have a responsibility not only to their shareholders but also to the patients they serve. Excessive drug pricing can exacerbate health disparities, hitting vulnerable populations the hardest—especially low-income communities, the elderly, and the uninsured. At the same time, some companies have shown that it is possible to balance innovation and access. Organizations like Civica Rx, for example, are trying to change the narrative by offering essential generic drugs at lower, transparent prices (6).

Ultimately, ethical drug pricing is not just a matter of public relations—it is a crucial part of building a healthcare system that values human life over profit. Businesses that invest in fairer pricing models may not only earn public trust but also create more sustainable and profitable futures in the long run.

Conclusion

Drug pricing is more than just a business decision; it is a powerful factor that impacts lives, healthcare outcomes, and public trust. In today's healthcare environment, where patients are more informed and vocal than ever before, companies that prioritize both profitability and ethical responsibility will be best positioned for long-term success. While the costs of innovation and development are real, so too are the consequences of pricing drugs out of reach for the very people who need them. Moving forward, pharmaceutical companies must find ways to balance business interests with a commitment to accessibility and social good. By doing so, they can foster a more equitable healthcare system and create a future where medical breakthroughs truly benefit everyone—not just those who can afford them.

Bibliography

(1) Prescription Drugs: Spending, Use, and Prices. (2021). Congressional Budget Office. https://www.cbo.gov/publication/57050

(2) "Research and Development in the Pharmaceutical Industry," Congressional Budget Office, 2021. https://www.cbo.gov/publication/57126

(3) Feldman, R., & Frondorf, E. (2017). Drug Wars: How Big Pharma Raises Prices and Keeps Generics off the Market. Cambridge University Press.

(4) Hernandez, I., et al. (2022). “Pricing of New Drugs in the United States.” Health Affairs, 41(2), 262–270. https://doi.org/10.1377/hlthaff.2021.01067

(5) "Poll: Nearly 1 in 3 Americans Skip Medications Due to Cost," Kaiser Family Foundation. https://www.kff.org/health-costs/press-release/poll-nearly-1-in-3-americans-skip-medications-due-to-cost/

(6) "Civica Rx: A New Model for Providing Affordable Generic Medicines," Civica Rx. https://civicarx.org/