Cut drug prices? Deloitte counts the ways

Pricing pressures are a major challenge for drugmakers these days. Governments from the Philippines to Germany--and now China--are zeroing in on drug-price reductions as a way to save money in these fiscally uncertain times. Now, the consulting firm Deloitte, offers some ideas for lowering prices in the world's biggest pharma market--the United States.

Yes, drug prices seem to be a favorite topic for the U.S. government, and some increased rebates made it into the healthcare reform package. But Deloitte is suggesting ways to damper prices not just in government programs, but marketwide. As the Wall Street Journal Health Blog reports, the firm advocates the following:

  • Public disclosure of average sales prices for all drugs, after rebates and discounts. Putting forth actual prices, rather than "suggested retail" prices, would give health plans a better idea about the types--and sizes--of discounts available.
  • Reimbursement recommendations from the government. Think about the comparative-effectiveness research included in the healthcare reform law. Deloitte says that research should extend to reimbursement guidance for insurers and other payers. In other words, analysis of cost-effectiveness (the law currently prohibits cost as a consideration).
  • International price-pegging. Deloitte figures the U.S. could save money by linking drug prices here to average prices charged in other countries.

No doubt these ideas would effectively lower drug prices. We just can't imagine the industry going for any of them. Disclosing discounts? Pharma has fought that idea vociferously. Cost-benefit analysis? The industry is already hoping to get that pesky Medicare payment advisory board pulled out of the healthcare reform law. Price benchmarking? Given that U.S. drug prices tend to be among the highest in the world, pharma could only lose on that proposition (to its credit, Deloitte acknowledges that the idea would have an impact on industry revenue).

There are a couple of things pharma and Deloitte can agree on, however. The firm recommends against U.S. government price negotiation for meds covered by Medicare. And it's against drug reimportation.

- read the Health Blog piece