Why France Spends Less than the United States on Drug: A Comparative Study of Drug Pricing and Pricing Regulation
By Veronique Raimond
Pharmaceutical spending per capita in the U.S. is higher than in all other industrialized countries. Policymakers seeking lower drug spending often suggest benchmarking prices against other countries, including France, which spends half as much as the US on prescription drugs. In a new study, PORTAL researchers found that Medicare could save billions of dollars annually on prescription drug spending if the US adopted the French approach to evaluating and negotiating drug prices and limiting unfettered annual drug price increases.
We compared the price dynamics in France and the US between 2010 and 2018 for the six brand-name drugs with the highest gross expenditures in Medicare Part D. We analyzed associations between price changes in each country and key regulatory events in the light of a comprehensive review of US and French laws and regulations related to drug pricing. Prices for the six drugs studied were higher in the US than in France. In 2018, if Medicare had paid French prices for just the 6 the brand-name drugs in the cohort, the agency would have saved $5.1 billion. We identified 12 factors that explain why the US spends more than France on drugs, including variations in unit prices and the volume of prescriptions, driven by health technology assessment and value-based pricing in France.
American citizens are rightly concerned about the high cost of medications, and this study shows that regulations can help to reduce the cost of drugs and to align it with their value.
We point out that linking a drug’s price to clinical benefits at the launch of the drug and over its lifetime, as observed in France, is key to controlling spending. The regulation of prescription drugs in France is governed by rules that can inform discussions of US prescription drug policy and potential Medicare price negotiations.
PORTAL Blog posts are authored by PORTAL faculty, trainees, and collaborators.