Three Big Reasons U.S. Healthcare Spending Outpaces Other High-Income Countries | Managed Healthcare Executive

Key finding #2: Per capita spending for pharmaceuticals was $1,443 in the United States, compared with a range of $466 to $939 in other nations. For several commonly used brand-name pharmaceuticals, the United States had substantially higher prices than other countries.

According to a Kaiser Family Foundation report, the United States is the world leader in per capita prescription drug spending, representing 30% to 40% of the global market. Hector De La Torre, executive director, Transamerica Center for Health Studies, a healthcare consultancy, believes this is the case because in the United States, pharmaceutical companies set drug prices. In European countries and in many other countries, governments set drug prices. On average, the difference between the price of one drug in the United States and the same drug in France, Germany, Italy, Spain, and the United Kingdom was 50%, according to a McKinsey report. Direct marketing costs to consumers are much higher in the United States as well.

To lower pharmaceutical costs, Gallegos recommends reducing red tape associated with approving drugs in the pipeline, especially for generics. “With more options for consumers, competition should drive costs down,” he says. “By shortening the patent window of name-brand drugs and not limiting generic entrants, consumers will have more options and price will become a primary competitive factor.”

Gallegos also suggests negotiating from a larger population base. “Medicare, for example, should be able to negotiate drug prices for all Medicare recipients,” he says. “Many other countries negotiate drug prices on behalf of their entire country.” Furthermore, greater transparency will make rebates and other incentives better known. Developing more value-based pricing models for high-cost pharmaceutical therapies is another strategy.

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Three Big Reasons U.S. Healthcare Spending Outpaces Other High-Income Countries | Managed Healthcare Executive.