Imposing European-style price controls on prescription drugs in the United States would result in modest cost savings that would be more than offset by shortened life spans as the pace of drug innovation slows.
A Reuters article continues:
“We found policies that regulate the prices of drugs could result in modest savings for consumers, in the best cases on the order of $5,000 to $10,000 per person over a lifetime,” said Darius Lakdawalla of the nonprofit Rand Corporation, who worked on two studies appearing in a special report on drug pricing in the journal Health Affairs.
“But in many other cases, those policies resulted in very substantial losses to consumers in the form of reduced life expectancy and those would be worth tens of thousands of dollars,” Lakdawalla said in a telephone interview.
Some policymakers have suggested the United States adopt some form of price regulation as a way to curb rising prescription drug costs. Most European countries regulate drug costs, which is one reason European nations spend less than two-thirds as much per person on drugs each year than the United States.
Lakdawalla and colleagues used computer models of price regulation in 19 countries to simulate the impact of price controls that cut drug company revenues by 20 percent.
They said introducing price regulations into a largely unregulated market like the United States would result in less investment in developing life-saving drugs, which in the long run would reduce the life expectancy of Americans.
“We found longevity declines on the order of about a half of year for people at the age of 55 when you look out to people who are alive in 2050 and 2060,” he said.
Lakdawalla said a better approach would be to cut drug insurance co-payments by 20 percent, which would increase life expectancy in the United States by a half year by 2060 as more people take needed drugs and higher drug profits stimulate innovation.
Filed under: Uncategorized | Tagged: drug pricing, drug regulation, Innovation
