A Need for Government Intervention? Prescription Drug Prices and Retail Mark-ups

The high cost of prescription drugs has been an issue that numerous federal agencies have examined for years. In 2003, Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act, better known as Medicare Part D, in an effort to ease the burden of skyrocketing prescription prices for citizens 65 and older. While much of the discussion has focused on the impact on Medicare and Medicaid, the search for the source of high prescription drug prices has possible benefits for all patients. Unfortunately, the vast majority of research into this topic focuses only on the manufacturers of prescription drugs. This thesis examined the relationship between wholesale and retail prices of prescription drugs to discover whether this is another possible source of high prescription drug costs that policy makers need to consider. The findings suggest that more research is warranted. Many of the pharmacies surveyed reported unexpected negative mark-ups. Moreover, the Average Wholesale Rice evidently is not an accurate basis for comparison with actual retail prices. The findings suggest that more research is warranted, including studies by federal legislative and executive branch actors with investigatory authority.