CHICAGO Dec 16 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, U.S. researchers
said on Tuesday.
They said lowering insurance co-payments would be a better way
of attacking the problem of rising prescription drug prices in the
United States, which pays more per capita for pharmaceuticals than
any other nation.
"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, who worked on
two studies appearing in a special report on drug pricing in the
journal Health Affairs.
"But in many other cases, those policies resulted in very
substantial losses to consumers in the form of reduced life
expectancy and those would be worth tens of thousands of dollars,"
Lakdawalla said in a telephone interview.
Some policymakers have suggested the United States adopt some
form of price regulation as a way to curb rising prescription drug
costs. Most European countries regulate drug costs, which is one
reason European nations spend less than two-thirds as much per
person on drugs each year than the United States.
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.
Lakdawalla said a better approach would be to cut drug
insurance co-payments by 20 percent, which would increase life
expectancy in the United States by a half year by 2060 as more
people take needed drugs and higher drug profits stimulate
"In the best cases it would lead to a benefit on the order of
$20,000 to $30,000 per person," Lakdawalla said.
All five papers in the section were funded by a grant from the
pharmaceutical company Pfizer Inc (PFE.N). Lakdawalla also got
funding from the National Institute on Aging.
F.M. Scherer of Harvard questioned some of the assumptions
made by Lakdawalla in a commentary in the journal, including the
assumptions about the rate at which lost drug company profits
would translate into less innovation.
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 prices had reached a
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.
(Editing by Bill Trott)