Drugs and technology

Drug charity programs help drug company profits

Written by Diane Archer

As drug prices continue to escalate way faster than inflation, an increasing number of people are hard-pressed to pay for their medications–even when they have insurance. Insurers keep premiums down by shifting an ever-larger amount of the cost of drugs to the people who use them through higher copays. A new Bloomberg Businessweek story shows how drug charity programs, which cover these copays for people with low incomes, help drug company profits.

In short, pharmaceutical companies only make money off their high-priced drugs if people buy them. When insurance copays are exorbitant, people don’t buy them. So, to boost sales, drug companies donate to drug charity programs to ensure people can afford their drug copays.

Put differently, drug companies can invest in charities in order to improve profits. In 2014, they contributed over a billion dollars to the seven biggest charities that cover copays for people with Medicare. Turing Pharmaceuticals increased the price of Daraprim by a factor of 50 and then donated $1 million to Patient Services Inc. to offset the cost of the drug’s copay for patients who could not afford it.

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