Increasing drug prices in the United States may be a result of the cost and complexity of drug development, government-protected monopolies given to drug manufacturers, and the restriction of price negotiation, according to recent data published in JAMA.
Aaron S. Kesselheim, MD, JD, MPH, from the Division of Pharmacoepidemiology and Pharmacoeconomics and the Department of Medicine at Brigham and Women’s Hospital and Harvard Medical School, and colleagues peer-reviewed health policy literature from January 2005 to July 2016 to identify studies that address the sources of drug prices in the United States.
Drug spending in the United States per capita exceeds that in all other countries. The per capita spending was $858 in 2013 compared with the average $400 for 19 other industrialized nations. Prescription medications in the United States currently comprise an estimated 17% of personal healthcare services.
“The most important factor that allows manufacturers to set high drug prices is market exclusivity, protected by monopoly rights awarded upon Food and Drug Administration approval and by patents,” the study authors wrote. “The availability of generic drugs after this exclusivity period is the main means of reducing prices in the United States, but access to them may be delayed by numerous business and legal strategies.”
Negotiating power of the payer could help prevent excessive pricing during market exclusively, but this is constrained by several factors, including the requirement that many government drug payment plans cover nearly all products.
The researchers also noted that a key contributor to drug spending is a physician’s prescribing choice when comparable medications are available at different costs. There is no evidence to suggest an association between research and development costs and prices, and current prescription prices in the United States are based on the market.
“Opportunities to address these problems include paying greater attention to potentially unjustified granting and extension of patent exclusivity, enhancing competition by ensuring timely generic drug availability, providing greater opportunities for price negotiation by governmental payers, generating more evidence about comparative cost effectiveness of therapeutic alternatives, and actively educating physicians and patients about such choices to promote more value-based decision making,” the authors wrote.
- Kesselheim AS, Avorn J, Sarpatwari A. The high cost of prescription drugs in the United States origins and prospects for reform. JAMA. 2016;316(8):858-871. doi:10.1001/jama.2016.11237.