Home Health Are drug costs increased within the US than in different international locations? – Healthcare Economist
Health - May 20, 2021

Are drug costs increased within the US than in different international locations? – Healthcare Economist

Standard knowledge holds that the costs of prescribed drugs are increased within the US than in different international locations. However is that basically the case? And in that case, by how a lot?

Which value?

The query we have to reply is “which value” do you imply? There may be the producer wholesale value (i.e., gross value) which is how a lot wholesalers pay for medicine from producers. Then, there may be the retail gross drug value which is how a lot retail pharmacies pay for medicine after shopping for them from wholesalers with some extra mark-up. One more part of value are rebates and reductions that drug producers pay to pharmacy profit managers after the actual fact. Making an allowance for these reductions, we get the web value. Of most curiosity to sufferers is affected person out-of-pocket value which depends upon: (i) whether or not somebody has insurance coverage, and (ii) how a lot of the drug’s value insurance coverage will cowl. Profit designs might embody sophisticated guidelines with deductibles, coinsurance, co-payments and medicines on totally different formulary tiers.

For the aim of this train, let’s concentrate on gross and web drug costs to disregard any variations in affected person value due merely to medical health insurance profit design.

The reply: Sure, medicine within the US are the most costly.

Now that we’ve the definitions out of the best way, let’s check out a current Authorities Accountability Workplace (GAO) report that compares drug costs within the US, to these in Australia, Canada and France. GAO examined 41 brand-name, single-source (i.e., no generic or biosimilar availability) pharmaceuticals that ranked highest by way of U.S. Medicare Half D expenditures in 2017. The evaluation accounted for rebates within the US utilizing both Half D rebate knowledge or an alternate 43% common low cost. Rebates and low cost knowledge for different international locations was not obtainable to GAO. Though rebates and reductions are usually bigger (in each absolute and relative phrases) than in different international locations, the GAO technique solely applies the rebates to the US; thus variations in costs throughout international locations that’s estimated is probably going conservative.

Primarily based on the GAO evaluation, each retail and producer drug costs are 2.5 occasions increased within the US than Canada and about 4 occasions increased within the US than France or Australia.

The place does drug R&D happen?

One other attention-grabbing discovering from the GAO report was the place most drug improvement occurred. GAO discovered that the US had a a lot bigger share of pharmaceutical analysis and improvement spending happen inside their borders than Australia, Canada or France mixed (each in absolute phrases and as a share of GDP).

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