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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.
*Corresponding author.
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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