Financial risk assessment
Trump’s administration announced its desire to impose drug prices – officially called a policy for the most favored nation (MFN). In essence, policy sets the price for targeted medicines at the lowest price in other industrial countries. The MFN president’s excuse is simple: Americans disappear because drug prices are cheaper in other industrial countries.
This justification mentions the problems that plague US healthcare system. Three imperfections increase the prices of lists for innovative medicines compared to other industrial countries (OECD or Organization for Economic Cooperation and Development). First, the US drug market is plagued by ineffectiveness. Secondly, other industrialized countries impose non -economic price controls on innovative medicines. Third, the highest US drug prices are simply reflecting the dysfunction of the wider US healthcare system.
The sustainable improvement in US economic addiction to the US requires policies that are aimed at each of these imperfections.
Before discussing the defects of the current drug pricing system, it is important to recognize some of its strengths. For example, 90% of all drugs prescribed in the US are not branded drugs. They are generic and biochemicals. The overwhelming majority of general drugs in the US cost $ 20 or less. Average copays for patients are $ 6.06. These values are also 33 % cheaper in the US compared to OECD countries. In other words, Americans spend less money than Europeans, British and Canadians in 90% of prescription drugs.
Generals are less expensive due to the competing US market. The imposition of price controls, such as those promoted by the president, undermines the vitality of the competitive market, which is at risk of saving patients.
Despite the lower prices for generics, the claim that drug prices are more expensive than other industrial countries is correct for 10% of prescriptions that are innovative drugs.
The development of innovative drugs that help patients living with diseases that have not been treated is expensive – costs until $ 2.9 billion per treatment, including after -marketing expenditure. Without the opportunity to restore these capital expenses, future innovations will remain at the expense of patients.
The adoption of MFN policy eliminates the opportunity to restore capital costs and essentially closes patients living with diseases without effective drugs. It also creates important access issues for patients living with diseases where there are available treatments – a common problem in other OECD countries.
Instead of accepting the high weight of price controls, the US will have to focus on improving the effectiveness of the drug pricing market. Focusing on these ineffectiveness created by politics can cause significant savings for patients, while promoting the important goals of increasing access and promoting innovation. Treating the defects exploited by Pharmacy Affairs (PBM) is an example of these beneficial reforms.
PBMs are intermediaries managing the benefits of prescription drugs for insurers and government payers. However, due to the opacity and complexity of the drug pricing system, manufacturers paid “PBMS and PBM Contracting Entities” of $ 72 billion only in $ 2022 or $ 0.42 from every $ 1 spent on brand drugs in the commercial market that year according to a study by Research.
Excessive revenue from PBMS significantly inflates total drug spending. Even more amazing, for drugs such as Ozempic or ENBREL, 42% of PBM gets the total price for drugs in most OECD countries. Including $ 58 billion in fees paid to PBMS for Medicare part D The recipes, PBMS’s total revenue exceeds total drug spending in Canada, the United Kingdom and Japan.
PBMS unjustified revenue inflates the total cost of innovative US drugs, leading to higher costs outside the pocket for patients. Reforms, such as S.526focusing on the review of the inflationary impact of the PBMS and the required higher transparency of prices will help address this problem.
It is not just the dysfunction of the US Drug Pricing Market that causes the price gap with the OECD. These nations also impose non -financial price controls on innovative medicines. These price checks create serious issues of access to nations that adopt them. They also put pressure on prices in the US because there are still capital costs for the development of innovative therapies. Consequently, the US will have to push other countries to abolish (or at least mitigate) their damaging price controls through trade negotiations.
Close focus on drug price comparisons with other industrial countries is also problematic because it hides systematic cost problems affecting the entire US healthcare system. Innovative medicines cost more in the US, as well as hospital stays, patient surgery and medical visits.
In fact, the differences in drug spending in the US are comparable to the differences in overall expenditure for health care. Get the disputes of per capita. US Health Care Expenditure in the US is 2.5 times higher than spending on the average OECD nation. Per capita pharmaceutical costs in the US are 2.3 times higher than the levels of spending on the average OECD nation. This resemblance argues that the US -based drug premium simply reflects the overall differences in overall health care costs. Reducing the cost of drugs will therefore require improvements in the wider healthcare system.
Beneficial reforms are needed in the US Drug Pricing System. However, the introduction of foreign price controls through President Trump’s MFN program is not the answer. They are at risk of patients with access to current drugs, increase the risks that will never develop effective drugs and are unable to solve the biggest issues affecting US healthcare system.
