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Comparative Approaches to Drug Pricing.

So-Yeon Kang1, Ge Bai1,2, Michael J DiStefano1

  • 1Bloomberg School of Public Health, Johns Hopkins University, Baltimore, Maryland 21205, USA; email: skang57@jhu.edu, gbai@jhu.edu, mdistef1@jhu.edu, msocal1@jhu.edu, fyehia1@jhmi.edu, ganderson@jhu.edu.

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Summary

Drug pricing in the United States relies on market forces, unlike other industrialized nations that use price controls. These differing approaches result in substantially higher prescription drug costs in the U.S.

Keywords:
ability to payaccess to pharmaceuticalsdrug innovationdrug pricesexternal reference prices

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Area of Science:

  • Health Economics
  • Pharmaceutical Policy
  • Comparative Healthcare Systems

Background:

  • The United States primarily utilizes market forces for drug pricing.
  • Most other industrialized nations employ diverse strategies for drug price determination.

Purpose of the Study:

  • To compare drug pricing mechanisms between the United States and other industrialized countries.
  • To analyze the effectiveness of different approaches in controlling branded drug prices.

Main Methods:

  • Comparative analysis of national drug pricing policies.
  • Examination of market-based versus regulated pricing systems.
  • Review of negotiation tactics by pharmacy benefit managers.

Main Results:

  • The U.S. lacks government price controls, allowing high list prices for branded drugs during patent/exclusivity periods.
  • Negotiations by pharmacy benefit managers appear less effective than international price regulation methods.
  • Prescription drug prices are substantially higher in the United States compared to other industrialized nations.

Conclusions:

  • Absence of government price regulation in the U.S. contributes to higher drug costs.
  • International methods like external reference pricing and health technology assessment are more effective in containing drug prices.