Pharmaceutical regulation, pricing, coverage and policy reform in the United States of America

Abstract

The United States (US) is the largest economy in the world and the largest pharmaceutical market, accounting for 40% of the global expenditure on pharmaceuticals and almost half of the global pharmaceutical pipeline. This review describes prescription drug regulation, pricing and coverage in the US and provides perspectives for policy reform. With an unregulated market-based pricing system for drugs, the US pays on average 3 to 4 times higher prices for branded prescription drugs than other industrialized countries. Challenges posed by rising drug prices create affordability problems that threaten the American population’s health as well as the sustainability of the US healthcare system. The US stands out as the country with the highest health expenditure per capita, at about 17% of its gross domestic product, and with pharmaceuticals representing over 12% of the total health expenditure. Health coverage is strongly dependent on employmentbased private insurance, with government programs like Medicare and Medicaid providing coverage to older and poorer populations, respectively. Coverage for outpatient prescription drugs is included in most, if not all, private health insurance plans and government programs. Although some drug pricing policy reforms have been proposed in recent years, no major nationwide initiatives have been successful in the US thus far. High drug prices might not only impact the US care system’s efficiency, but can also have a ripple effect to other countries like Brazil that use the US for external reference pricing, even if those countries may have other price regulation mechanisms in place. This is particularly important for new therapies for which no other international prices may be available in the global market besides the one from the US. The growing budgetary pressures from rising drug prices underscore the need for US drug pricing reform and highlight the need for global pricing mechanisms that can help ensure early access to new technologies at fairer prices.