Prescription Drug Price Regulations May Shorten Life Span
Price controls on drugs in the U.S. may help save money spent on prescription drugs, but it could also result in shortened life spans because of the lagging effect it could have on drug innovation, researchers reported on Tuesday.
"We found policies that regulate the prices of drugs could result in modest savings for consumers, in the best cases on the order of $5,000 to $10,000 per person over a lifetime," said Darius Lakdawalla of the nonprofit Rand Corporation, who worked on two studies appearing in a special report on drug pricing in the journal Health Affairs.
"But in many other cases, those policies resulted in very substantial losses to consumers in the form of reduced life expectancy and those would be worth tens of thousands of dollars," Lakdawalla said.
Some government officials have offered up options that would result in price regulation as a way to curb rising prescription drug costs, but researchers said the better approach to lowering U.S. drug prices would be lowering insurance co-pays.
Using computer models of price regulation in 19 countries, Lakdawalla’s team was able to see the affects of drug price regulation.
They found that price controls cut drug company revenues by 20 percent.
These price regulations would likely result in less investment in developing life-saving drugs, which in the long run would reduce the life expectancy of Americans, researchers said.
"We found longevity declines on the order of about a half of year for people at the age of 55 when you look out to people who are alive in 2050 and 2060," said Lakdawalla.
He recommended a 20 percent reduction of drug insurance co-pays. This would increase life expectancy in the United States by a half year by 2060 as more people take needed drugs and higher drug profits stimulate innovation.
"In the best cases it would lead to a benefit on the order of $20,000 to $30,000 per person," Lakdawalla said.
A team of researchers that included Harvard economist David Cutler, a health policy adviser for President-elect Barack Obama, suggested in the same journal that drug prices had reached a "turning point."
They noted that while drug prices tripled from 1997 through 2007, spending in 2007 grew just 1.6 percent, the slowest rate since 1974, as many brand-name drugs lose patent protection.
—
On the Net: