NCPA - National Center for Policy Analysis

Bitter Pill for Americans

December 30, 2002

Drug companies are growing increasingly frustrated by the efforts of European governments to hold down prices. Germany, France and Italy are considering proposals to rein in soaring health-care budgets and reduce pharmaceuticals prices.

Ultimately, it may be U.S. consumers who pay the price. Drug makers are turning even more to the U.S. -- the only major industrialized country without government price controls -- for profits.

  • Over the past decade the U.S. market for pharmaceuticals has more than tripled to $175 billion a year from $48 billion, while Europe's market has grown relatively slowly, to $88 billion from $57 billion.
  • Over the next five years, the research group IMS Health projects growth in North America will be nearly 60 percent, compared with 35 percent in Europe.
  • While France and Italy have initiated price cuts of at least 5 percent in the past year, drug prices are rising at least 2 percent to 3 percent a year in the United States.

"Americans end up subsidizing the rest of the world," says Bernie Horn, policy director of the Center for Policy Alternatives, a U.S.-based progressive public-policy group.

Source: Gautam Naik and Vanessa Fuhrmans, "How Americans May Subsidize Euro-Health Care," Wall Street Journal, December 26, 2002.

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