This paper analyzes the impact of government policies on pharmaceutical prices and on the share of population excluded from access to some essential medications. Favorable tax treatment of employer sponsored health insurance and other health expenditures is an important influence on the pharmaceutical industry. This paper evaluates the impact of tax subsidies on the size of the population excluded from access to some essential medications. Tax subsidies increase reservation price of all agents and that in turn puts upward pressure on drug prices. In the world where drugs are tax deductible the estimated price of a drug supplied by a monopolist is 53% higher than in a world without tax subsidies. A crude but robust calibration shows that this leads to an increase in the number of individuals excluded from some essential medication by over 12% of the US population. The impact of Medicaid on the share of excluded patients is also considered. By law the price paid by Medicaid is linked to the price that private parties pay for drugs. This gives drug makers a perverse incentive to increase the price for private parties in order to increase revenues from Medicaid patients. This imposes significant upward price pressure on prices of drugs that have no substitutes. A crude estimation shows that the number of excluded patients slightly increases due to Medicaid. Although this result is not robust, it is a robust finding that the number of patients excluded due to the price impact of Medicaid is of the same order of magnitude as the number of patients covered by Medicaid.