|
 Prices
And Availability Of Pharmaceuticals:
Evidence From Nine Countries
- This study is one of the most comprehensive comparisons ever
undertaken of prescription drug prices – comparing the U.S.
with eight other countries – including Canada, Chile, France,
Germany, Italy, Japan, United Kingdom and Mexico. It includes
originator and generic products, for 249 leading compounds.
- It compares manufacturer-level prices, rather than retail prices,
because retail prices also include wholesaler and pharmacy mark-ups
and taxes, which differ across countries.
- The most comprehensive indexes, including originator and generic
products, show Japan’s prices to be higher than U.S. prices,
with the other countries ranging from 6-33 percent lower than
the U.S. Canada’s prices were the lowest.
- The U.S. has one of the highest levels of generic drug use
relative to total prescription volume, and generic prices are
lower in the U.S. than in all the countries except Canada, where
the difference is 6 percent.
- Exchange rate fluctuations are a major contributor to drug
price differences. The decline in the Canadian dollar in the 1990s
accounts for 19 percentage points of the 33 percent Canada-U.S.
price differential.
- When drug prices are compared using GDP purchasing power parities,
which standardize for cost-of-living differences, the Japan-U.S.
differential virtually disappears and the Canada-U.S. differential
shrinks from 33 percent to 14 percent.
- The U.S.-foreign price differentials are actually smaller for
drugs than for other medical services, although this conclusion
is tentative because the available price indexes for other medical
services are rough.
- Price differences are generally consistent with income differences
among countries. In the two countries that were exceptions, Mexico
and Chile, prices were higher compared to their average per capita
income and usage was far less than in other countries.
- The relatively unregulated, more competitive structure of the
U.S. market results in relatively high prices for on-patent drugs
but strong generic competition, low generic prices and high generic
shares once patents expire. By contrast, the more heavily price-regulated
markets have lower prices for on-patent drugs, but less competition
from generics and larger market shares of previously patented
brand drugs, once the patent expires. The U.S. also has higher
utilization of the newest drugs. The U.S. structure appears more
conducive to innovation.
|
|
