NCPA - National Center for Policy Analysis

Are U.S. Drug Prices Really Higher?

November 14, 2003

Most price comparisons that find drug prices much higher in the United States than other parts of the world are flawed, say researchers Patricia Danzon and Michael Furukawa. Their research found that U.S.-foreign price differentials are roughly in line with income and are smaller for drugs than for other medical services.

Most studies exclude all generic drugs and limit their analyses to a few widely used brand-name drugs, even though generics now account for roughly half of the unit volume in the United States. This makes drug prices appear much higher in the United States than in other countries.

Based on a comprehensive comparison of drug prices in eight developed countries, Danzon and Furukawa found that:

  • When comparing only brand drugs, Japan's prices are the highest for all countries, with the United States in second place; prices in the other six countries were 28 percent to 42 percent lower than in the United States.
  • When comparing both brand and generic drugs, Japan's prices are still highest, with the United States appearing second, but all the other countries' prices are now only 6 percent to 30 percent lower than the U.S. prices.

The authors indicate that pharmaceutical markets differ greatly across countries, in range of compounds, presentations, use, generic shares and the number and type of manufacturers. Consequently, there is no single perfect price comparison is feasible.

Source: Patricia Danzon and Michael Furukawa, "Prices and Availability of Pharmaceuticals: Evidence from Nine Countries," Health Affairs - Web Exclusive, October 29, 2003.

For text

http://content.healthaffairs.org/cgi/reprint/hlthaff.w3.521v1.pdf

 

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