Dr Patricia Danzon Highlights European Examples of Restraining Drug Prices

A combination of different countries’ health systems can set an example for the United States to follow in efforts to restrain the ongoing increases in drug prices, explains Patricia Danzon, PhD, the Celia Moh Professor at The Wharton School, University of Pennsylvania.

Transcript (slightly modified)

What are some example of countries that have successfully curbed drug prices that the US might want to consider? And would they even work in the US?

I would say that I think the combination of the systems. The structure of the systems in Germany and the United Kingdom but very much adapted for the US model would be an approach that I think could work here. The idea of letting the drug on the market while an assessment is being made, but then let the payers have a notion of what is the value threshold in terms of a cost per quality-adjusted life year, or some other measure of health gain, that is what they are willing to pay for a drug. Because we have a pluralistic system of payers in the United States, it wouldn’t necessarily be the same threshold for every payer.

Already we have a system where Medicare pays one price, Medicaid gets rebates, the Department of Veterans Affairs gets other rebates, and the private sector negotiates its own discounts. So, the different payers could have their different thresholds and be negotiating discounts in return for preferred formulary placement, just as they do right now. But, the whole system could be geared to something that is based off an assessed value so the prices really are based on something that is a measure of actual value delivered in terms of the patient-centric health benefits and the cost saved to the healthcare system. Whereas, at the moment the price is pretty much whatever the manufacturer chooses to name, and that contributes to our unending upward spiral of prices.