Healthcare "like in Europe?" Bad idea.
According to new study (published in a five-paper special report on drug pricing in Health Affairs), imposing European-style price controls on prescription drugs in the United States would result in modest cost savings that would be more than offset by shortened life spans as the pace of drug innovation slows.
The report suggests that lowering insurance co-payments would be a better way of attacking the problem of rising prescription drug prices in the United States.
"We found policies that regulate the prices of drugs could result in modest savings for consumers, in the best cases on the order of $5,000 to $10,000 per person over a lifetime," said Darius Lakdawalla of the nonprofit Rand Corporation. (This paper was funded by a grant from Pfizer and the National Institute on Aging.)
Lakdawalla and colleagues used computer models of price regulation in 19 countries to simulate the impact of price controls that cut drug company revenues by 20 percent.
They said introducing price regulations into a largely unregulated market like the United States would result in less investment in developing life-saving drugs, which in the long run would reduce the life expectancy of Americans.
"We found longevity declines on the order of about a half of year for people at the age of 55 when you look out to people who are alive in 2050 and 2060," he said.
A team of researchers that included Harvard economist David Cutler, a health policy adviser for President-elect Barack Obama, suggested in the same journal that drug spending growth rates had reached a "turning point."
They noted that while drug prices tripled from 1997 through 2007, spending in 2007 grew just 1.6 percent, the slowest rate since 1974, as many brand-name drugs lose patent protection.
Cutler and colleagues noted that prescription drug spending trends have changed dramatically in the past five years, and assumptions based on older trends no longer apply.
The Health Affairs special issue can be found here.
And Reuters coverage can be found here.
According to new study (published in a five-paper special report on drug pricing in Health Affairs), imposing European-style price controls on prescription drugs in the United States would result in modest cost savings that would be more than offset by shortened life spans as the pace of drug innovation slows.
The report suggests that lowering insurance co-payments would be a better way of attacking the problem of rising prescription drug prices in the United States.
"We found policies that regulate the prices of drugs could result in modest savings for consumers, in the best cases on the order of $5,000 to $10,000 per person over a lifetime," said Darius Lakdawalla of the nonprofit Rand Corporation. (This paper was funded by a grant from Pfizer and the National Institute on Aging.)
Lakdawalla and colleagues used computer models of price regulation in 19 countries to simulate the impact of price controls that cut drug company revenues by 20 percent.
They said introducing price regulations into a largely unregulated market like the United States would result in less investment in developing life-saving drugs, which in the long run would reduce the life expectancy of Americans.
"We found longevity declines on the order of about a half of year for people at the age of 55 when you look out to people who are alive in 2050 and 2060," he said.
A team of researchers that included Harvard economist David Cutler, a health policy adviser for President-elect Barack Obama, suggested in the same journal that drug spending growth rates had reached a "turning point."
They noted that while drug prices tripled from 1997 through 2007, spending in 2007 grew just 1.6 percent, the slowest rate since 1974, as many brand-name drugs lose patent protection.
Cutler and colleagues noted that prescription drug spending trends have changed dramatically in the past five years, and assumptions based on older trends no longer apply.
The Health Affairs special issue can be found here.
And Reuters coverage can be found here.
