Prescription drugs most expensive in US; Ireland a top spender
The US pays the highest prices for prescription drugs and while Pfizer, the US pharmaceutical firm, says it is moving its tax residency to Ireland because of high taxes in the US and in each of the past five years managed to declare losses there, nevertheless its home market is where it can get the highest prices in the world for its products. Prices are also high in Ireland and in 2012, 20 mainly US drugs companies with facilities in the country, warned Enda Kenny, taoiseach, that a decision about changes in the State's arrangements for drugs reimbursements and pricing, could have implications for 25,000 jobs and future investment.
Ireland spends 77% more per capita on drugs annually than Norway — the richest country in Europe.
The Wall Street Journal reports today that Norway, an oil producer with one of the world’s richest economies, is an expensive place to live. A Big Mac costs $5.65. A gallon of gasoline costs $6. However, prescription drugs are much cheaper there than in the US.
The Journal says that a vial of the cancer drug Rituxan cost Norway’s taxpayer-funded health system $1,527 in the third quarter of 2015, while the US public-funded Medicare program paid $3,678. An injection of the asthma drug Xolair cost Norway $463, which was 46% less than Medicare paid for it.
The newspaper says drug prices in the US are shrouded in mystery, obscured by confidential rebates, multiple middlemen and the strict guarding of trade secrets.
But for certain drugs — those paid for by Medicare Part B — prices are public. By stacking these against pricing in three foreign health systems, as discovered in nonpublic and public data, The Wall Street Journal was able to pinpoint international drug-cost differences and what lies behind them. What it found, in the case of Norway, was that US prices were higher for 93% of 40 top branded drugs available in both countries in the third quarter. Similar patterns appeared when U.S. prices were compared with those in England and Canada’s Ontario province. Throughout the developed world, branded prescription drugs are generally cheaper than in the US.
The US Congress has prohibited Medicare, the largest single US customer for prescription drugs, from negotiating pricing!
In respect of Medicare Part B, companies report the average price at which they sell medicines to doctors’ offices or to distributors that sell to doctors. By law, Medicare then adds 6% to these prices before reimbursing the doctors. Beneficiaries are responsible for 20% of the cost.
US prices for the world's 20 top-selling medicines are, on average, three times higher than in Britain, according to an analysis carried out for Reuters.
Reuters said in October that the finding underscores a transatlantic gulf between the price of treatments for a range of diseases and follows demands for lower drug costs in America from industry critics such as Democratic presidential candidate Hillary Clinton.
The 20 medicines, which together accounted for 15% of global pharmaceuticals spending in 2014, are a major source of profits for companies including AbbVie, AstraZeneca, Merck, Pfizer and Roche.
The Organisation for Economic Cooperation and Development (OECD) reported last July that spending on health accounted for 16.4% of gross domestic product (GDP) in the US in 2013, followed by The Netherlands and Switzerland at 11.1%, 8.9% for Norway and 8.1% for Ireland (GNP basis would be higher).
Researchers at the University of Liverpool also showed in October that how Americans are paying significantly more for cancer drugs than their European counterparts.
Presented at the European Cancer Congress the analysis focussed on the cost of tyrosine kinase inhibitors (TKIs), a potent class of cancer pills with fewer side effects than chemotherapy.
Dr Andrew Hill, Senior Visiting Research Fellow in the University’s Department of Pharmacology, found that pharmaceutical companies were charging up to 600 times what the medicines cost to make, with Americans paying double the price charged in Europe.
Based on Dr Hill’s findings, the World Health Organization (WHO), determined that the drugs can be made at lower cost.
Dr Hill said:
Several widely-used TKIs are expected to become available as generics within the next five years, as current patents expire. Large scale production could drastically reduce the annual cost of these drugs for patients. There has to be some middle ground between the prices that companies are charging, which may not even be cost-effective by the standards set by some healthcare authorities, and the actual production cost. The future pricing of TKIs could also have major implications for developing countries since mass production could open the way to widespread cancer treatment in the same way that cheap generic drugs helped fight HIV/AIDS.
The work follows on from Dr Hill’s research into the Hepatitis B drug, entecavir, which he found could be mass produced for only £24 ($36) per person per year versus the current UK NHS (National Health Service) price of approximately £4,600, and the US price of over $15,000. "This would lead to huge reductions in the number of people being infected with the disease and significantly lowering the current death rate of 686,000 per year worldwide."
In a report presented to the health minister last October, the Joint Committee on Health and Children of the Oireachtas said there is scope to reduce the cost of pharmaceutical drugs in Ireland.
It proposed a financial incentive mechanism for pharmacists to supply generic drugs which come under the high-tech drug scheme, which covers high-cost cancer and arthritis drugs. It also suggested a campaign be launched by the HSE (Health Service Executive) to promote greater use of generic drugs, stressing their efficacy and dispelling misinformation that might exist around their use.
The report says Ireland benchmarks its prices against a ‘basket’ of 9 countries: Austria, Belgium, Denmark, Finland, France, Germany, the Netherlands, Spain and the UK, using the average price in each country, where available and it recommends extending the basket to 15 countries.
The report is not a comprehensive one and does not include price comparisons. However, the Committee recommends the publication of baseline price comparisons for all EU member states on an annual basis.
The HSE says the State's annual drugs bill was cut from €2.0bn in 2012 to €1.8bn in 2014. However, Finfacts has previously reported that the bill had doubled from 2002 to over €1.6bn in 2008. Fees and other income earned by pharmacists doubled accordingly. It cost the taxpayer an exorbitant €640m to get €1bn of drugs from factory gate to patients in the community in 2008.
Ireland and Greece had the lowest level of prescribing of generic drugs and according to the OECD. Until the passing of the Health (Pricing and Supply of Medical Goods) Act 2013, if an Irish medical doctor wrote a drug's brand name on a prescription, the pharmacist could not suggest a generic version.
1. Includes medical non-durables (resulting in an over-estimation of around 5-10%) 2. Excludes spending on over-the-counter medicines. Source: OECD Health Statistics 2015
The ESRI (Economic and Social Research Institute) published a report in June 2013 on the prices of drugs/ pharmaceuticals. It noted that in contrast with the rest of the EU, generic prices in Ireland were similar to brand-owned/ patent holder prices.
In July 2014, The Irish Times reported:
Generic medications to treat breast cancer, for example, can cost more than 10 times more here than in the UK while statins — which are used to regulate cholesterol — remain almost five times more expensive here than in Northern Ireland. This is despite being trumpeted as the drugs which would usher in a new fair- price regime in the Republic. Donepezil, a commonly used generic medication to treat dementia, has a price tag of €1.56 in the UK but costs about €20 in the Republic, while drugs to treat blood pressure, which cost less than €2 in Newry, will cost about €6.50 in Dundalk.
The current three-year deal between the State and the drugs companies expired in October.
The European Commission said this year that "the potential remains to reduce public spending on pharmaceuticals, in particular patented medicines, which is well above the EU average."
The OECD said in its Health at a Glance 2015 report:
Pharmaceutical spending in Ireland has been cut in recent years (including cuts in middlemen margins) as policy measures were introduced to reign in public spending on health following the financial and economic crisis. Still, spending on pharmaceuticals per capita in Ireland remains higher than in most other OECD countries, and nearly 30% above the OECD average in 2013. Ireland has introduced a series of measures to encourage the prescription and consumption of generics to reduce pharmaceutical cost. Although the share of the generic market has increased in recent years, it nonetheless remains relatively low compared with other OECD countries, both in volume (29% compared with an OECD average of 48%) and in value (16% compared with an OECD average of 24%).
The OECD said in 2014 that the consumption of antibiotics in Ireland was relatively high in 2011: 10% higher than the EU average and two-times higher than in the Netherlands.