Making Sense of Drug Prices

CROSS-NATIONAL PRICE DIFFERENCES: HOW REAL AND HOW LARGE? Flawed Studies Overstate Differentials The view that drug prices are much higher in the United States than in other countries has been fueled by studies that have attempted to compare drug prices in several congressional districts with prices in Canada and Mexico. One such study was issued in 1998 by the Committee on Government Reform and Oversight of the U.S. House of Representatives as a minority staff report (Prescription Drug Pricing in the 1st Congressional District in Maine: An International Price Comparison). It reported that drug prices in the United States were 72 percent higher than in Canada and 102 percent higher than in Mexico. Two earlier studies by the U.S. General Accounting Office (gao) concluded from data for 1992 that U.S. prices were 32 percent higher than prices in Canada and 60 percent higher than the prices in the United Kingdom (UK). Most countries other than the United States regulate drug prices, either directly through controls on prices (e.g., France and Italy), indirectly through limits on reimbursement under social insurance schemes (e.g., Germany and Japan), or indirectly through profit controls (e.g., the UK). Studies that claim to find lower drug prices in other countries lend support to proposals for the reguH E A L T H