Deregulation and Market Forces Can Lower Pharmaceutical Prices: New at Reason

Currently, the pharmaceutical market is anything but free. Could that change?

Marc Joffe writes:

In the rollout of their “Better Deal” program this week, Democrats identified high prescription drug prices as a major challenge facing America and proposed new regulations to rein them in.

Their diagnosis is spot on, but their prescription is backwards. The way to roll back pharmaceutical prices is to deregulate and rely on market forces. But for that to happen, both Democrats and Republicans will have to resist the pharmaceutical lobby, which benefits from the status quo and is very generous with its donations.

In 2015, spending on prescription drugs totaled $325 billion, or roughly $1,000 for every person in the U.S. according to federal data. Pharmaceutical spending rose by 9 percent from 2014 to 2015, far outstripping the growth of the GDP.

Drugs in the U.S. often cost more than twice as much as they do in other developed countries. A 28-day supply of Humira costs a whopping $2669 on average here, according to the International Federation of Health Plans. The same supply costs $822 in Switzerland, $1253 in Spain, and $1362 in the United Kingdom.

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