New medications can provide substantial benefits, but high prescription drug prices have led to calls to contain costs. Even after accounting for discounts and rebates, average prices of leading brand-name drugs in the United States are two to four times higher than in other wealthy countries, raising questions about what these higher prices are buying us. With the advent of ever more targeted and powerful treatments, including cell- and gene-based therapies with multimillion dollar price tags, the need for sensible drug pricing policies will intensify. Price controls, common in other countries, seem appealing, but these measures can discourage innovation. Moreover, on what basis should policymakers develop such controls? This book argues that pricing prescription drugs to reflect the value they bring to patients, families, and society achieves the right balance. The book reviews the distinguishing features of the prescription drug market and explains why simple solutions like price controls and importing drugs from countries with lower drug prices are problematic without explicit assessments of value. It then describes how economists measure value, how value assessment for drugs is now being used in the United States, and what must happen going forward to overcome challenges.
International Real Estate Review