Stealing other countries' prescription drug cost-saving ideas

September 17, 2012

The U.S. can learn from ways other countries slow prescription drug spending growth, according to a new policy analysis from the National Institute for Health Care Reform (NIHCR)

The U.S. can learn from ways other countries slow prescription drug spending growth, according to a new policy analysis from the National Institute for Health Care Reform (NIHCR).

Written by Jack Hoadley, a research professor at Georgetown University's Health Policy Institute, in consultation with the Center for Studying Health System Change (HSC), the policy analysis examines how reference pricing and comparative-effectiveness, cost-effectiveness research might be adapted for the U.S.

“With appropriate modifications to fit the U.S. context, both approaches could increase the use of generic drugs and less-expensive brand-name drugs, helping to constrain spending growth,” the analysis state. “In particular, reference pricing-an approach where a payer sets payment for a group of similar drugs using a benchmark based on a lower-priced option-could increase consumer incentives to select less-expensive alternatives. Similarly, an approach that bases formulary placement and cost-sharing tiers on scientific assessments of the clinical value of competing drugs offers the potential both to increase acceptance of cost management by patients and physicians and to improve health outcomes.

Outpatient prescription drugs account for about 10%-$259 billion in 2010-of total U.S. health spending. Other developed nations typically pay much lower prices for brand-name drugs than the United States.

The Policy Analysis-Adapting Tools from Other Nations to Slow U.S. Prescription Drug Spending-is available online at www.nihcr.org/Drug_Spending.

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