Negotiating drug prices in the US - lessons from Europe

In the US, spending on prescription drugs increased from $30 billion in 1980 to $335 billion in 2018, which is mainly associated with the high prices of brand-name drugs.1 Prices are substantially higher compared with European countries.2 One explanation for this price differential is that, unlike in the US, national health authorities in Europe negotiate new drug prices with manufacturers. The US Inflation Reduction Act, which was signed into law in August 2022, empowers the US Secretary of Health and Human Services to negotiate the prices for a limited number of brand-name drugs, with the greatest spending within Medicare’s Part B (which covers clinician-administered drugs) and Part D (which covers retail drugs) programs.3 The bill stipulates that drug pricing negotiations must consider policies, such as whether a drug represents a therapeutic advance or fulfills an unmet medical need.3,4 Therefore, policy makers in the US will need to address 2 questions as a matter of priority: How should therapeutic advance (which can also be referred to as therapeutic value) be assessed? How should evidence on therapeutic advance be used to negotiate drug prices? Lessons can be learned from European countries (such as England, France, Germany, and Switzerland) that have a long track record in evaluating drug value and using this information to secure lower prices.