Drug Prices Are Suppressed Overseas, White House Study Finds - (The Wall Street Journal via NewsPoints Desk)

  • According to a report from the White House Council of Economic Advisers, foreign governments are taking unfair advantage of drug company research and consumers in the US by artificially suppressing drug prices abroad, reported The Wall Street Journal.

  • "Stringent government underpricing in foreign countries has substantially increased foreign free-riding on the US," the report said, adding "the result is a slower pace of overall innovation, less competition from new entrants, and thus higher prices paid for patented drugs that lack therapeutic competition."

  • The study compared the prices of 200 top-selling branded drugs in the US and 15 other developed countries. It concluded that European prices on top-selling drugs are about 32% of US prices and that the difference has widened since 2003, when they were 51% of US equivalent prices.

  • The news source noted that countries with lower incomes or with less health spending would presumably pay less for drugs, according to the study, which found that Canada's prices are 35% and its per capita income 78% of the US level.

  • If Canada's prices were 78% of US prices, "total revenues for innovative drugs in Canada would have been $27.2 billion instead of the actual $12.2 billion," the study said. Applying that methodology to all the countries examined, the Council of Economic Advisers estimates global drug company revenue would have been $194 billion, or 42%, higher in 2017.

  • Tomas Philipson, the acting Council of Economic Advisers chairman, said biopharmaceutical companies' investment in new-drug development is directly linked to potential profitability. He added that foreign underpricing depresses the return on and the incentive for such investment.

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