On September 23, 2019, the House Ways & Means Committee released a report outlining and comparing the pharmaceutical pricing in the United States and abroad. The report analyzed the list prices of seventy-nine brand-name drugs in the United States, United Kingdom, Japan, Ontario, Australia, Portugal, France, Netherlands, Germany, and Denmark. The report concluded that in 2018, prices were an average of four times higher in the United States than in other comparator countries and that prices remained higher in the United States, even after taking into consideration rebates.
Though the United States’ prices were significantly higher than comparator countries, there were a wide variation in drug prices among the countries studied, with the average pharmaceutical list price ranging from $69.50 (in Japan) to $466.15 (in the United States).
The report mainly focused on the price systems and price negotiations in the countries and how they impact the price of the drug. There was very little discussion as to why price differences exist between the United States and other countries, or even why the prices varied so much abroad – from the low average of $69.50 in Japan to the next-highest average of $182.29 in Denmark.
It seems that rather than breaking new ground and releasing new information, the report instead acts as a call to action by the Democrats on the House Ways & Means Committee. By comparing different reference price systems, calling for direct price negotiations, and modeling spending reductions based on pricing drugs using an average of a basket of other rich countries, the majority in the Committee have indicated the possibility that negotiations and reference pricing have a path forward under current leadership.
In addition to calling for negotiations and reference price controls, the report calls out specific products for their price differentials. The report’s appendices include deep dives into the pricing differences between the United States and select countries overseas, especially focused on particular drugs whose list prices in the U.S. do not match those in other high-income countries, such as Humira, Xarelto, NovoLOG, and Harvoni.
In a press release announcing the report, Ways & Means Chairman Richie Neal said that the report shows the importance of passing House Speaker Nancy Pelosi’s plan to lower drug prices across Medicare, Medicaid, and commercial markets through reference pricing mechanisms. “Our findings underscore the need for Congress to pass H.R. 3, the Lower Drug Costs Now Act, newly-introduced legislation that would allow the U.S. government to negotiate lower drug prices for American consumers based on international pricing,” he said in the release. As there is currently no Congressional Budget Office score for the proposed legislation, this report may serve as a placeholder for the cost or savings related to certain parts of the bill as leaders await an official score.
According to the report, the United States could save $49 billion annually using certain reference pricing policies. As the House and Senate continue to debate drug pricing legislation, it is very likely that the $49 billion annual savings figure will become a centerpiece in the conversation, either as the placeholder for a CBO score for H.R. 3 as suggested above, or in another capacity.