Why Does the United States Pay, by Far, the Highest Prices in the World for Prescription Drugs?
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Why Does the United States Pay, by Far, the Highest Prices in the World for Prescription Drugs?

That is the topic of a U.S. Senate hearing last week. One person testifying was an economist, USC Professor Darius Lakdawalla. While his full testimony is here, his key points of contention are worth reading. These include:

  • The challenge for public policy is to sustain the pace of medical innovation while ensuring that valuable new technologies remain affordable and accessible.
  • The U.S. is by far the largest market for pharmaceuticals in the world and the engine of global pharmaceutical innovation. Other countries, in effect, free ride off the innovation stimulated by the American market.
  • Despite stable or falling net prices paid to prescription drug manufacturers over the past decade novel medicines lie increasingly beyond the financial reach of American patients.
  • Blunt price controls are not the solution to the worsening affordability of prescription drugs or to global free-riding: Schaeffer Center research suggests that introducing European-style pricing policies would reduce Americans’ life expectancy.
  • Instead, aligning drug prices with the actual value provided to patients stimulates innovation that benefits patients and discourages innovation that does not.
  • Legislation to increase drug price transparency, coupled with better information about value, can help payers and consumers spend their money wisely.
  • Affordable and generous insurance for prescription drugs ensures that drugs remain within the financial reach of American families.

You can read the full testimony here. The testimony text also is full of hyperlinks to interesting articles.

Originally posted at Healthcare Economist.

The views expressed herein are those of the author and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.

Giles Monnickendam

Director, HEOR & market access

1 年

This is one perspective on the issue. Steve Pearson would probably have provided a more balanced view.

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Christian Staples MBA

Economic Historian Lecturer Semi-Retired!

1 年

The United States has just 4.2% of the World's Population and produces 15.2% of its GDP (PPP method), and yet it generates 42% of all pharmaceutical sales and 65% of its profit. They are nothing but Rent Seekers and the government needs to negotiate for lower prices. Also, the CDC states life expectancy in the United States is 76.4 years, while in Europe life expectancy is 79.1 years-it seems they have a better model than we do!

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Jose Manuel Garnica

Experienced, independent thought leader in the Value & Access and Health Economics fields, with broad and deep global exposure and proven leadership capabilities in cell therapy, oncology, neuroscience and vaccines.

1 年

I’m surprised about the assertion that Americans’ life expectancy is at risk of being reduced by applying European-style pricing policies. European life expectancy is higher (vs US)! This does not sound like a strong argument.

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Sangeetha R.

Transformational BioPharma Commercialization and Portfolio Strategy Executive | Experienced in Marketing Strategy and Execution | Precision Medicine | Partnerships and Alliances | Passionate People Leader

1 年

The bottom line and challenge is to balance sustaining medical innovation with ensuring affordability and accessibility of new technologies. Blunt price controls are not a solution. I believe there is a need to dial up the role of #patientadvocacy and #policychange in #drugdevelopment , engagement with manufacturers, and creative policy shifts to protect continued innovation and drive access. Organisations like Peter Kolchinsky's No Patient Left Behind are trailblazers. The environment is going to demand more of these.

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Uffe Jon Ploug

Global HE director at UCB by day, external lecturer at UCPH by night and on Tuesday afternoons

1 年

An interesting read (and interesting links to research), albeit not entirely convincing. We need to capture value, but not with QALYs. But how should the value then be captured? That is the problem we always face - and I'm not seeing a real and true solution. That part seems to be vague.

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