US Differs from Worldwide Drug Reimbursements Save

"The US has nearly 4.5% of the world’s population but accounts for more than 40% of global drug spending" reports JAMA Internal Medicine.  US drug prices are nearly double those of Australia, Canada, and the United Kingdom, and the US spends twice as much on retail and nonretail drugs per capita as Switzerland, the country with the next highest spending.

This report compares price mechanisms and government regulations used in 6 countries  United States, Australia, France, Germany, Norway, Switzerland, and the United Kingdom. There were 8 key lessons gleened from the regulations used in these countries and some of these elements are incorporated into new legislations before the US Congress, as it appears that drug costs are a priority for the current and future administrations.

The 6 countries studied have universal health insurance and represent diverse financing, delivery, and reimbursement systems that differ from the US.

No country (other than the US) simply accepts pharmaceutical manufacturers’ prices.

None of these countries are at a disadvantage regarding access to new therapeutics or innovative research.

Therapeutic value is negotiated with pharmaceutical pricing abroad.

The article details pricing regulation and policies for  Australia, France, Germany, Norway, Switzerland, and the United Kingdom. 

Eight Lessons Learned

1. Drug regulations are national and apply to all patients. These 6 countries do not have separate payment schemes for different patient groups. 
2. Reimbursement is linked to comparative therapeutic value (compared to existing drugs that are therapeutically equivalent). 
3. Reimbursement is informed by objective standards. (eg, cost-effectiveness analyses, external reference pricing)
4. Prices are established through negotiation with manufacturers or direct determination of maximum reimbursement rates. This is usually done by government, rather than Insurers.
5. Countries use built-in mechanisms to periodically lower prices. (Price reductions at fixed times or with the introduction of competitors, periodic price reviews)
6. Some countries cap annual pharmaceutical spending growth.
7. Government does not have to implement drug price limits.
8. Some countries require political decisions to cover drugs that exceed an affordability threshold on total health spending.

Current US Drug Price Proposals

There are 3 current congressional proposals (HR 3, HR 1046, and S 2543) that have not yet been voted upon. Not surprisingly, these bills do not incorporate lessons from other countries. None of these bills apply to all patients, require price regulation or explicit approval of high-cost drugs, or provide a mechanism to lower prices over time. 

While none of these bills limits total national pharmaceutical spending growth, two of these (HR 3) and the Senate bill attempt to limit increases in Medicare drug prices, and allow for rebates for annual increases that exceed the rate of inflation.

Thus, none of the current US legislative on drug pricing are as systematic, comprehensive and cost effective as regulations seen in these 6 other countries.