NCPA - National Center for Policy Analysis

Paying The Price For Drugs In Europe

July 21, 2000

Whether they admit it or not, those who advocate "making drugs more affordable for American seniors" are actually headed down a slippery slope to price controls, free-market analysts charge. They should take a look at how price controls in Europe have led to rationing of, and delayed access to, new anticancer drugs.

  • European governments -- which pick up most of their citizens' health care costs -- need to keep drug prices down because budgets are tight.
  • Drug availability depends on the willingness of local health authorities to pay their share -- and introduction of new medicines can be held up as drug makers spend months haggling with individual European governments.
  • In some countries, governments have banned new drugs that authorities think are too costly.
  • Although a number of revolutionary new anticancer drugs are expected to reach the market just as the incidence of cancer begins to rise among Europe's aging populations, health officials are expected to keep them off pharmacy shelves for cost reasons.

For example, Herceptin -- a new breast cancer medication from Genentec -- got the green light from U.S. regulators two years ago. But it is still awaiting regulatory approval in most of Europe.

Officials employ various strategies to halt or delay the sale of costly new medications. They can withhold or delay approval for sale. Or they can restrict demand with tight controls on prescribing new drugs. Or they can refuse to raise state hospital budgets enough to cover the cost. Such policies are shortsighted, since drug therapies are far less expensive than hospitalization.

Observers report that Belgium and Norway are among the worst practitioners of such policies.

Source: Stephen D. Moore, "In Drug Cost Debate, Europe Offers U.S. a Telling Side Effect," Wall Street Journal, July 21, 2000.


Browse more articles on Health Issues