By: Aurelien Portuese (LinkedIn)
Four out of five Americans say prescription drug prices are unreasonably high, according to a recent KFF survey—and people across the political spectrum say pharma profits are a major contributing factor. So it came as no surprise earlier this month when Sen. Amy Klobuchar (D-MN) called a hearing in the Senate Subcommittee on Competition Policy, Antitrust, and Consumer Rights to scrutinize alleged anticompetitive conduct in prescription drug markets. But in the end, the hearing merely demonstrated that, to the extent there is a problem with drug prices in America, antitrust policy is the wrong tool to address it.
First, some important context. The truth is that generic drug prices are lower in America than in other countries—57 percent lower than in Canada, 58 percent lower than in France, and 68 percent lower than in the United Kingdom—and generic drugs account for 91 percent of dispensing generic medicine prescriptions. More broadly, the notion that prescription drug prices in the United States are out of control is a case of perception overshadowing reality. For instance, according to the Peterson Center on Healthcare and Kaiser Family Foundation, the share of U.S. healthcare spending going toward retail prescription drugs has been remarkably consistent from 2000 to 2017 and was projected to grow only modestly from 2018 to 2027. And according to the U.S. Bureau of Labor Statistics, U.S. hospital prices increased by more than one-third more than U.S. drug prices, from 1999 to 2000. Drug prices grew only slightly more than prices for doctors (195 percent versus 165 percent) and only moderately more than the increase in the overall U.S. consumer price index over this period (155 percent). Moreover, net per capita spending on prescription medicines has remained effectively flat, increasing just 0.5 percent on average over the past 10 years…
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