This week in China, the National Development and Reform Commission put dramatic retail drug price cuts into effect. To lower prices, hospitals and clinics are now required to cap the costs for over 1,200 antibiotics and circulatory system drugs, according to Reuters. The 21% average decrease means $1.53 billion savings for Chinese patients – which is good news for them, but what does this mean for Americans?
While many of our drugs or drug ingredients are already manufactured in China, these price cuts won’t reduce the price of those drugs sold in the U.S. What could happen is the opposite. Lower prices in China may further drive increases in U.S. drug prices as drug companies look to the U.S. market to make up for lower margins in China. The U.S. is the only large market in which drug companies can arbitrarily increase their prices.
As we have reported in the past, while foreign governments exercised greater price controls during the recession to reign in their healthcare budgets, U.S. brand name drug prices continued to increase.
The conclusion is that price controls and reductions in other countries often result in brand name drug price increases in America. This doesn’t seem fair to the American consumer, especially those who need brand name drugs and do not have health insurance. It is mostly for these Americans that we created our Consumer Guide, How to Save Money on Prescription Drugs, Safely.
