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article imageAmericans subsidizing health systems elsewhere with drug prices

By Karen Graham     Oct 12, 2015 in Health
Most Americans probably don't know this, but we pay on average, three times more for the world's 20 top-selling medicines than people living in the U.K. For those same medications, we pay six times more than people in Brazil.
In an exclusive analysis of drug price comparisons conducted by Reuters, the huge gulf in the price of medications to treat a wide range of diseases was laid bare, underscoring the demands for lower drug prices in the U.S. from critics like Democratic presidential candidate Hillary Clinton.
The 20 medicines made up about 15 percent of global pharmaceuticals spending in 2014, and are big money-makers for companies such as AbbVie (ABBV.N), AstraZeneca (AZN.L), Merck (MRK.N), Pfizer (PFE.N) and Roche (ROG.VX).
The research, done by scientists at the University of Liverpool, also found U.S. drug prices were consistently higher in other countries besides the UK. American prices for medications were six times higher than the same drugs in Brazil, and 16 times higher than average in the lowest-price country, India.
Why the big difference in drug prices?
In the United States, pricing is based on market competition, without the government stepping in and putting caps on the cost of pharmaceuticals. In many countries around the world, governments either directly or indirectly control the costs.
It is said this makes it more profitable for drug companies, but it has led some people to say that Americans are subsidizing the world's health care systems, which seems to be the case, looking at the results of the analysis. There have been numerous incidents of late where drug prices by U.S. manufacturers have risen far more than is reasonable, but pharmaceutical companies have a quick answer.
Manufacturers claim the high prices on many of their medications are needed to offset the costs of research and development, especially when "orphan drugs" are brought up in the conversation. Such was the case recently when Alexion Pharmaceuticals sued the Canadian government, saying the price of their drug, Soliris, the most expensive medication in the world, has not changed, even though Canada's Patented Medicine Prices Review Board claims the medication is so expensive few people can afford it.
Actually, it was found that the U.S. price for many top drugs jumped 127 percent between 2008 and 2014, as compared to 11 percent for a shopping basket of common household goods for the same period. In the U.S., these drug prices have gone well over annual inflation increases, while at the same time, European governments have worked to cap drug costs or in some cases, reduce them.
PhRMA speaks out in defense of costs
Holly Campbell, PhRMA's director of communications, said in a statement, “The U.S. has a competitive marketplace that works to control costs while encouraging the development of new treatments and cures." She also argued that while Americans may pay more for drugs when they first come out, as the drugs gets older, they end up paying less because eventually 90 percent of them come out in generic form.
In the UK, just three-fourths of drugs are also sold as generics, while in other countries in Europe, the numbers are even smaller. The analysis did find the differences in drug prices was smaller when looking at complex antibody-based drugs, like those used to treat cancer or rheumatoid arthritis.
Many of the price hikes in the U.S. were seen in older drugs, contrary to what Campbell claims. University of Liverpool drug pricing expert Andrew Hill said, "It shows the U.S. drug pricing situation isn't just a matter of isolated cases like Turing Pharmaceuticals."
Boosting the price of Daraprim from $13.50 a pill to $750 helped to open the investigation into drug pricing. The Guardian is reporting that EvaluatePharma, a London-based consulting firm, is reporting that generic versions of Fioricet and Fiorinal, drugs that have been around for a long time, have seen dramatic increases in price the past year. But so too have the prices of common medications taken by thousands of people, such as prednisone and digoxin.
More about Drug costs, capped costs in Europe, generic drug prices, Pharmaceutical companies, market competition
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