By Daniel R. Matlis
Although Senators McCain and Obama (listed in alphabetical order) are looking to address many of the same problems, they have very different approaches.
The Presidential candidates don’t agree on many things, from the economy to energy, healthcare to taxes, even Joe the Plumber.
One thing they both agree on: Drug Re-importation.
I thought it would be worth discussing some facts about drug re-importation:
FACT: You can buy many pharmaceutical drugs abroad for a lower price.
FACT: Some of these drugs are made by the same company at same plant, to the same standards as those sold in the US.
So why is a 30 day supply of 20mg Lipitor available for $60.78 on CanadaDrugs.com while Drugstore.com offers the same product and dose for $119.99?
The answer is good American capitalism. No, not in the way you think. Pharmaceutical Companies are not charging more in the US simply because they can.
Pharma Companies are obliged to charge less for the same product in every “G-7” (Group of 7) industrialized nation countries (Canada, France, Germany, Italy, Japan, the United Kingdom) except for the United States (see Table for examples).
Drug Pricing in Canada
In Canada, the Patent Medicine Prices Review Board establishes and enforces guidelines that determine the maximum prices at which manufacturers can sell brand name drugs. The Canadian pricing system results in brand name drug prices that are an average of 38% lower than prices in the US
Drug Pricing in France
The French pricing system allows pharmaceutical companies to sell their products at any price. However, if these companies want the national health care system to reimburse patients for the cost of the drug, the companies must agree to a lower, negotiated price. The French pricing system results in brand name drug prices that are an average of 45% lower than prices in the US
Drug Pricing in Italy
Italy’s national health care system allows manufacturers to sell their drugs at any price.
However, if these drugs are to be eligible for reimbursement under the national health care system, pharmaceutical companies must set the price of the drug at a cost that does not exceed a twelve country European average price. The Italian pricing system results in brand name drug prices that are an average of 48% lower than prices in the US.
Drug Pricing in the United Kingdom
Drug companies in the United Kingdom are free to establish their own prices for individual drugs. However, under the country’s pharmaceutical laws, the maximum profit that drug manufacturers can earn on sales in the United Kingdom is limited. The pricing system in the United Kingdom results in brand name drug prices that are an average of 31% lower than prices in the US.
The fact is that price controls in 6 of the G7 nations places an undue strain on the US consumer.
To put it in simple terms, the US (about 300 million people) subsidize R&D for the other six G7 countries (about 425 million people). That doesn’t seem fair to me.
Having been born and raised in what we now call a “Developing Economy” (we used to be known as 3rd world counties), I recognize that adjustments must be made to factor economic conditions. However, industrialized nations should be able to equitably share in the development of life-saving therapies.
Unfortunately, drug re-importation proposals by both Presidential candidates seek to address the symptom, not the cause.
Forcing Pharmaceutical companies to artificially lower the cost of drugs in the US will have a negative impact on their ability to bring new and life-changing products to market. And that hurts us all.
In my opinion, we should seek to address the root cause of higher prescription drug costs in the US. To this end, every G7 nation should equitably share in the cost of R&D for pharmaceutical drugs. That would bring prices down in the US, while supporting the development of new and innovative Pharmaceutical therapies.