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Prescription Drugs: Companies Typically Charge More in the United States Than in Canada
Pursuant to a congressional request, GAO provided information on the cost of prescription drug products, focusing on: (1) domestic and foreign price comparisons of identical prescription drugs; and (2) causes for documented price differentials. GAO found that: (1) manufacturers' prices for identical prescription drugs are generally higher in the United States than in Canada; (2) differences in U.S. and Canadian drug prices can be attributed to Canadian price regulations, reimbursement practices, and price controls; (3) manufacturers' research, development, marketing, production, and distribution costs are the same for identical drugs, but manufacturers charge U.S. wholesalers substantially more for the same drugs; (4) 81 percent of the drugs reviewed were more expensive in the United States and prices averaged 32 percent more; (5) Canadian regulations force manufacturers to accept cost reviews for new drugs and restrain prices for existing drugs; (6) Canadian provincial governments' containment of manufacturers' price setting discretion, liberal reimbursement policy, and power over adding or removing drugs from the reimbursable list results in concentrated buying power and low prices; and (7) there is some dispute over whether similar U.S. regulation and price controls would effectively control drug prices while sufficiently encouraging research and development of new and innovative drug products.

Prescription Drugs

United States. Congress. House. Committee on Energy and Commerce. Subcommittee on Health and the Environment

Published: 1993

Total Pages: 6


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Prescription Drugs: Companies Typically Charge More in the United States Than in the United Kingdom
Thanks to remarkable advances in modern health care attributable to science, engineering, and medicine, it is now possible to cure or manage illnesses that were long deemed untreatable. At the same time, however, the United States is facing the vexing challenge of a seemingly uncontrolled rise in the cost of health care. Total medical expenditures are rapidly approaching 20 percent of the gross domestic product and are crowding out other priorities of national importance. The use of increasingly expensive prescription drugs is a significant part of this problem, making the cost of biopharmaceuticals a serious national concern with broad political implications. Especially with the highly visible and very large price increases for prescription drugs that have occurred in recent years, finding a way to make prescription medicinesâ€"and health care at largeâ€"more affordable for everyone has become a socioeconomic imperative. Affordability is a complex function of factors, including not just the prices of the drugs themselves, but also the details of an individual's insurance coverage and the number of medical conditions that an individual or family confronts. Therefore, any solution to the affordability issue will require considering all of these factors together. The current high and increasing costs of prescription drugsâ€"coupled with the broader trends in overall health care costsâ€"is unsustainable to society as a whole. Making Medicines Affordable examines patient access to affordable and effective therapies, with emphasis on drug pricing, inflation in the cost of drugs, and insurance design. This report explores structural and policy factors influencing drug pricing, drug access programs, the emerging role of comparative effectiveness assessments in payment policies, changing finances of medical practice with regard to drug costs and reimbursement, and measures to prevent drug shortages and foster continued innovation in drug development. It makes recommendations for policy actions that could address drug price trends, improve patient access to affordable and effective treatments, and encourage innovations that address significant needs in health care.
Examines the extent to which drug manufacturers charge more for the same products in the U.S. than abroad. Also, studied manufacturers' "factory prices" and identified the causes of any documented price differentials. Compares factory prices for the top 200 frequently dispensed prescription drugs sold in both the U.S. and the U.K. 7 charts and tables.