Abstract: Congress and the states have not addressed Americans’ need for expanded prescription drug coverage because most strategies either are enormously costly or are viewed as endangering drug makers’ profits and research. Letting Americans suffer for lack of needed drugs is intolerable, but spending much more is unaffordable and unnecessary. Instead, the challenge is to secure more drugs from manufacturers for the amount already spent here, plus sums to cover their actual, incremental costs. An important first step would be government action cutting drug makers’ prices to levels such as those prevailing in Canada. We estimate the savings that such price cuts would yield for Americans. Because lower prices would spur higher volume, drug makers could replace much or most of their lost revenue. In addition, in a "drug price peace treaty," the federal government could guarantee drug makers all the lost revenue that is not replaced through higher private market volume. Public subsidies would also cover the actual incremental costs of manufacturing and dispensing the higher volumes of drugs. Those costs are just a fraction of the projected costs of most coverage expansion proposals. Such steps could protect both patients and drug makers, making needed drugs for all affordable, avoiding windfall profits, but preserving drug makers’ ability to finance research. Longer-run strategies could also help spur research and contain costs.
Learning Objectives: Learning objectives: Participants will (1) understand major consequences for Americans of international prescription drug price disparities, (2) understand why the common estimates of the cost of drug coverage expansions far exceed the real cost of making prescription drugs available to all Americans who need them, and (3) be able to identify methods for making prescription drugs more affordable without harming drug makers' ability to finance research.
Presenting author's disclosure statement:
Organization/institution whose products or services will be discussed: None
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.