The Obama administration's health reform law will bring more scrutiny of spending on drugs and medical care in the US, and as a result, healthcare experts suggest downward pressure on drug prices will begin to mount within three to five years, as reported The US Daily.
Rajiv Kaul, portfolio manager of Fidelity Investments Select Biotechnology Portfolio, said the reliance of pharmaceutical companies on the US market "is the greatest risk to the sector…Healthcare pricing is going to get tougher. It would be foolhardy to think otherwise."
US sales of prescription drugs still account for more than a third of worldwide sales, compared with a share of around 24 percent for Europe. "The US is at the stage now that [drugmakers] are not suffering that much, compared to Europe," said Silvia Ondategui-Parra, a partner at Ernst & Young's life sciences division, but "things will be changing there [the US] in the next two years clearly."
A 2011 European Parliament study found that the price in the US for a basket of 150 pharmaceutical products was about double the level in the EU. Neil Grubert, an analyst at Decision Resources, noted that in the US, companies can set prices at launch and then increase them, but "in most other markets that is not the case."
Austerity measures in Europe are intensifying, with Germany saying earlier this month that its medical cost-benefit agency would review prices for a range of older brand-name drugs, including diabetes and arthritis treatments. Meanwhile, major drugmakers have focused on boosting sales in emerging markets.
Government and private health plans globally are now looking for stronger evidence that medications are worth the cost in terms of improving people's health and lowering other types of spending, such as hospital stays, according to the news source. "Everyone is getting much more rigorous about the value proposition," said Terry Hisey, head of the life sciences team at Deloitte.