Drug Cost Curbs And R&D Spending: US GAO Report

Any gains made from regulation of prescription drug prices or spending must be weighed against the consequences of such regulations for pharmaceutical R&D, says a report presented last month by the US General Accounting Office to the chairman of the Senate Special Committee on Aging, David Pryor (Marketletters July 11 & 18).

Senator Pryor asked the GAO to study the range of prescription drug cost-containment policies used in other industrialized countries, particularly those that, like the USA, are home to strong research-based drug industries. The GAO analyzed the effects of such policies in France, Germany, Sweden and the UK and, in its report to Sen Pryor: - described the strategies used in these countries to control prescription drug prices and limit drug spending; - reviewed the effects of these policies on drug prices and spending; and - analyzed their effects on pharmaceutical R&D.

The GAO's report notes that while in the USA some prescription drugs are purchased by consumers, some are financed by insurers and some paid for by government programs such as Medicaid, in the four countries studied such drugs are financed entirely through a national health insurance system, the viability of which depends on restraining prescription drug costs. However, in France, Germany, Sweden and the UK, this need for constraint has been tempered by attention to how price restraint might affect industry. Regulators must weigh the concerns of a strong, research-based drug industry with the national interest in spending restraint, and they remain concerned that cost containment policies could diminish the development of new drugs.