Three Essentials for Negotiating Lower Drug Prices


Most high-income countries spend much less on drugs per person than the United States does, even though their citizens use about the same amount of medications as Americans. In a new post on To the Point, the Commonwealth Fund’s David Blumenthal, M.D., Shanoor Seervai, and Shawn Bishop explain how other countries spend less by negotiating lower prices.

Other countries’ approaches to achieving lower drug prices typically feature three core elements, Blumenthal says: aggregating drug purchasing to gain negotiating leverage with drug companies; using experts to systematically assess the value of individual drugs; and standing behind purchasers when they enter negotiations with pharmaceutical companies. These approaches are effective when governments are the purchasers and when they are not.

“Perhaps someday we’ll develop the political will to systematically institute the core elements of drug purchasing to achieve value-based prices,” Blumenthal writes. “But we should also expect that the U.S. approach will be unique and will reflect our size, diversity, federal political structure, and free-market orientation.”

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