Transcript ch27x

Health Policy Issues
An Economic Perspective
Copyright © 2015 Foundation of the American College
of Healthcare Executives. Not for sale.
Chapter 27
Why Are Prescription
Drugs Less Expensive
Overseas?
Copyright © 2015 Foundation of the American College
of Healthcare Executives. Not for sale.
LEARNING OUTCOME
Examine the accuracy of cross-national
drug price studies and why prices for
prescription drugs in the United States
are typically higher, along with the
implications of requiring US drug
manufacturers to charge a single
uniform price
Copyright © 2015 Foundation of the American College
of Healthcare Executives. Not for sale.
LECTURE
Accuracy of Studies on International
Variations in Drug Prices
• Exhibit 27.1
Why Prescription Drugs Are Expected to
Be Priced Lower Overseas
• Exhibit 27.2
Public Policy Issues
• Exhibit 27.3
Copyright © 2015 Foundation of the American College
of Healthcare Executives. Not for sale.
Exhibit 27.1
Prices for Celebrex, Selected Countries,
2012
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Copyright © 2015 Foundation of the American College
of Healthcare Executives. Not for sale.
Exhibit 27.2
World Pharmaceutical Market, 2012
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Copyright © 2015 Foundation of the American College
of Healthcare Executives. Not for sale.
Exhibit 27.3
Pharmaceutical Expenditures as a Percentage of
Total Health Expenditures, Selected Countries, 2011
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Copyright © 2015 Foundation of the American College
of Healthcare Executives. Not for sale.
DISCUSSION
Why can drug manufacturers charge
more for drugs in the United States
than in other countries?
What are some of the consequences of
regulated lower drug prices in
overseas countries?
Copyright © 2015 Foundation of the American College
of Healthcare Executives. Not for sale.
SUMMARY
Cross-national comparison studies that claim drug
prices are lower in other countries have been
seriously misleading.
• Although the retail prices of certain prescription drugs may be
lower overseas than in the United States, the more relevant
comparison is the cost of drug therapy in different countries.
• Only a small percentage of the US population pays retail prices
for drugs.
• The majority of the US population has some form of third-party
payment for drugs, and these large purchasers buy their drugs at
discounted prices.
• Generic drugs are also much more widely used in the United
States than in other countries.
• Absent from these cross-national comparisons is any discussion of
the availability of innovative drugs overseas.
Copyright © 2015 Foundation of the American College
of Healthcare Executives. Not for sale.
SUMMARY (CONTINUED)
Public policy affecting prescription drugs should be
evaluated on its effect on R&D expenditures.
Without government enforcement of patent rights
and pricing freedom, the drug industry would
decrease its investment in R&D—as drugs are
easy to copy but expensive to develop.
Seniors were provided with a prescription drug
benefit as part of the 2003 Medicare
Modernization Act; they now have a financial
incentive to choose among competing drug
plans based on the premiums charged and the
plan’s drug formulary.
Copyright © 2015 Foundation of the American College
of Healthcare Executives. Not for sale.