To Reduce the Cost of Drugs, Look to Europe
When anyone proposes reducing prescription drug prices— as Hillary Rodham Clinton and Bernie Sanders recently have—the most commonly heard criticism is that it would squelch innovation.
Though some drugs are breakthroughs, some offer only marginal benefits at exorbitant cost.
There is a way to keep prices low while encouraging drug companies to innovate: look to Europe and elsewhere, where drug prices are a fraction of those in the United States. Several European countries have pushed drug prices lower with a system called reference pricing. It has led to drastic drug price decreases and significant savings in the Canadian province of British Columbia as well as in Germany, Italy, Norway, Spain, and Sweden. A study in the American Journal of Managed Care found that reductions ranged from 7 to 24 percent.
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