Comparative Approaches to Drug Pricing

Abstract

The United States relies primarily on market forces to determine prices for drugs, whereas most other industrialized countries use a variety of approaches to determine drug prices. Branded drug companies have patents and market exclusivity periods in most industrialized countries. During this period, pharmaceutical companies are allowed to set their list price as high as they prefer in the United States owing to the absence of government price control mechanisms that exist in other countries. Insured patients often pay a percentage of the list price, and cost sharing creates some pressure to lower the list price. Pharmacy benefit managers negotiate with drug companies for lower prices by offering the drug company favorable formulary placement and fewer utilization controls. However, these approaches appear to be less effective, compared with other countries’ approaches to containing branded drug prices, because prices are substantially higher in the United States. Other industrialized countries employ various forms of rate setting and price regulation, such as external reference pricing, therapeutic valuation, and health technology assessment to determine the appropriate price.

Direct costs of adhering to selected Duchenne muscular dystrophy Care Considerations: Estimates from a midwestern state

“…43 Furthermore, the price of deflazacort may not necessarily represent either true costs or actual net payments. [48][49][50][51][52] An additional limitation is that modeling the cost of adhering to the DMD Care Considerations is dependent on meaningful operationalization of recommended encounters for which dollar values and unit frequencies can be determined. 53 As a result, our study was limited to those considerations for which a reasonable frequency could be defined and a unit cost assigned.…”

“…We used private health plan payments as a proxy of costs, and therefore our cost estimates do not apply to public payers 43 . Furthermore, the price of deflazacort may not necessarily represent either true costs or actual net payments 48‐52 . An additional limitation is that modeling the cost of adhering to the DMD Care Considerations is dependent on meaningful operationalization of recommended encounters for which dollar values and unit frequencies can be determined 53 .…”

How can we optimise health technology assessment and reimbursement decisions to accelerate access to new cardiovascular medicines?

“…Upon regulatory approval of new drugs, the Transparency Commission in the National Health Authority assesses therapeutic value, considering disease severity and burden, efficacy, safety, effectiveness, and alternative treatments [18,19]. This is followed by price negotiations with the manufacturer, which are impacted by relative effectiveness compared to available treatments [19].…”

Getting the Right Evidence After Drug Approval

“…Linking the value that a product delivers to its price may incentivize the development of transformative drugs. Value-based pricing mechanisms have contributed to lower drug prices in Europe as compared to the United States (Kang et al, 2020). However, lowering prices for drugs for which clinically relevant comparative benefits are still unclear does not solve the problem that patients and clinicians face when they must decide which treatment to start.…”