Health Affairs, doi: 10.1377/hlthaff.28.1.w138 (Published online December 16, 2008) © 2008 by Project HOPE	New Online   Senate Health Reform Bill   Rewarding Providers   Public Option Policy Brief   Health Reform & Abortion   Delivery System Reform

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U.S. Pharmaceutical Policy In A Global Marketplace

¹ Darius Lakdawalla is the director of research at the Bing Center for Health Economics at RAND in Santa Monica, California.
² Dana Goldman is chair and director of health economics, finance, and organization at RAND.
³ Pierre-Carl Michaud is an associate economist, Economics and Statistics at RAND.
⁴ Neeraj Sood is an economist at RAND.
⁵ Robert Lempert is a senior physical scientist, Technology and Applied Sciences at RAND.
⁶ Ze Cong is an assistant policy analyst at RAND.
⁷ Han de Vries is a policy analyst at RAND Europe in Cambridge, England.
⁸ Italo Gutierrez is a doctoral student in economics at the University of Michigan in Ann Arbor.

^*Corresponding author.

Abstract

U.S. consumers generate more pharmaceutical revenue per person than Europeans do. This has led some U.S. policymakers to call for limits on U.S. pharmaceutical spending and prices. Using a microsimulation approach, we analyze the welfare impacts of lowering U.S. prices toward European levels, and how these impacts vary with key modeling assumptions. Under the assumptions most favorable to them, price controls generate modest benefits (a few thousand dollars per person). However, for the remainder of plausible assumptions, price controls generate costs that are an order of magnitude higher. In contrast, publicly financing reductions in consumer prices, without affecting manufacturer prices, delivers benefits in virtually all plausible cases. [Health Affairs 28, no. 1 (2009): w138-w150 (published online 16 December 2008; 10.1377/hlthaff.28.1.w138)]

Key Words: Chronic Care, Consumer Issues, Health Reform, International Issues, Pharmaceuticals, Health Spending

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This article has been cited by other articles:

				N. Sood, H. de Vries, I. Gutierrez, D. N. Lakdawalla, and D. P. Goldman The Effect Of Regulation On Pharmaceutical Revenues: Experience In Nineteen Countries Health Aff., January 1, 2009; 28(1): w125 - w137. [Abstract] [Full Text] [PDF]

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				A. Jayadev and J. Stiglitz Two Ideas To Increase Innovation And Reduce Pharmaceutical Costs And Prices Health Aff., January 1, 2009; 28(1): w165 - w168. [Abstract] [Full Text] [PDF]