Why not force drug makers to compete with each other to prove they're providing added bang for patients' buck? Evzio, meet invisible hand. "The is a good idea-but it needs more support," he said.īahr is from Germany's pro-business Free Democratic Party, but he said that sometimes American conservatives refer to him as a "Socialist." (This is especially ironic given that Germany actually has a Socialist-like party, and they are the FDP's antithesis.)īut Bahr's approach to pharmaceutical price regulation is market-driven, if you think about it. It isn't as well-funded as its German counterpart, though, and as a result it has "allocated less than 3 percent of its research funding to studies involving prescription drugs and has not funded a single study of medical devices," Bahr notes. In the U.S., the Affordable Care Act created its own process to evaluate drug effectiveness-the Patient-Centered Outcomes Research Institute. "You wouldn't pay more for a KIA car when you can get a Cadillac for the same price."īahr writes in his paper that the new regulation so far hasn't had a chilling effect on medical innovation: "Even though the Federal Joint Committee ruled 27 prescription drugs to have no added benefit, only five of these drugs have left the German market as a result." "You wouldn't pay more for a KIA car when you can get a Cadillac for the same price," Bahr explained in an interview at a recent Atlantic Live event. Patients can still buy the newer medicine, but it's up to them to make up the price difference out of pocket. If the new drugs don't seem any better than their predecessors, the sickness funds will only pay for the price of the earlier version. Under AMNOG, as soon as a new drug enters the market, manufacturers must submit a series of studies that prove it heals patients better than whatever was previously available. As in "AMNOGonna pay drug companies for new meds that are more expensive but not any better than the old ones." rose 6.03 percent per insured person in 2009," wrote Daniel Bahr, the former German health minister and current senior fellow at the Center for American Progress, in a recent policy paper.Įnter 2010's Pharmaceutical Market Restructuring Act, or Arzneimittelmarkt-Neuordnungsgesetz, abbreviated in German as AMNOG. "German policymakers felt a pressing need for action since spending on prescription drugs. In the U.S., Medicare isn't even allowed to negotiate lower drug prices. because sickness funds negotiate with both physician groups and drug manufacturers to set costs of all treatments across the board. Drug prices there are already lower than in the U.S. The sickness funds cover both medical visits and prescription drugs. Reining in the cost of all of these new treatments is widely considered one of the key steps to bringing healthcare costs under control.Īmerica hasn't figured out quite how to do that yet-but Germany might have.Īlmost every German belongs to one of some 160 nonprofit "sickness funds," or nonprofit insurance collectives. Meanwhile, manufacturers are churning out newer and shinier versions of everything from diabetic pumps to cancer drugs. Prices for even generic prescriptions climbed 5.3 percent in 2012. Part of the reason is that we have no systematic way of determining the value of new gadgets and pharmaceuticals, or of driving down their prices.įor example, Evzio, a new device that rescues people who have overdosed on heroin, should cost about $3, based on its parts-but will instead likely be priced somewhere around $500. In December, Gilead Sciences released a hepatitis C drug that costs $1,000 per pill. Every day, medical innovation saves American lives, but those same breakthroughs contribute to our ever-skyrocketing healthcare bill.
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