Friday, December 2

Transatlantic divide: How US pays three times more for drugs

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LONDON: US prices for the world’s 20 top-selling medicines are, on average, three times higher than in Britain, according to an analysis carried out for Reuters.

The finding underscores a transatlantic gulf between the price of treatments for a range of diseases and follows demands for lower drug costs in America from industry critics such as Democratic presidential candidate Hillary Clinton.

The 20 medicines, which together accounted for 15 per cent of global pharmaceuticals spending in 2014, are a major source of profits for companies including AbbVie, AstraZeneca , Merck, Pfizer and Roche.

Researchers from Britain’s University of Liverpool also found US prices were consistently higher than in other European markets.

Elsewhere, US prices were six times higher than in Brazil and 16 times higher than the average in the lowest-price country, which was usually India.

The United States, which leaves pricing to market competition, has higher drug prices than other countries where governments directly or indirectly control medicine costs.

That makes it by far the most profitable market for pharmaceutical companies, leading to complaints that Americans are effectively subsidising health systems elsewhere.

Manufacturers say decent returns are needed to reward high-risk research and prices reflect the economic value provided by medicines. They also point to higher US survival rates for diseases such as cancer and the availability of industry-backed access schemes for poorer citizens.

In recent years, the price differential has been exacerbated by above-inflation annual increases in US drug prices at a time when governments in Europe have capped costs or even pushed prices down.

In fact, US prices for top brand-name drugs jumped 127 per cent between 2008 and 2014, compared with an 11 per cent rise in a basket of common household goods, according to Express Scripts, the largest US manager of drug plans.

In Europe, meanwhile, the impact of austerity on health budgets since the financial crisis has led industry executives to complain of single-digit per centage annual price declines.

The US Pharmaceutical Research and Manufacturers of America (PhRMA) says international comparisons are misleading because list prices do not take into account discounts available as a result of ‘aggressive negotiation’ by US insurers.

These discounts can drive down the actual price paid by US insurance companies substantially.

However, similar confidential discounts are also offered to big European buyers such as Britain’s National Health Service.

“The US has a competitive marketplace that works to control costs while encouraging the development of new treatments and cures,” Holly Campbell, PhRMA’s director of communications, said in a statement. — Reuters