Policy Points Spending on prescription drugs is much higher per capita in the United States than in most other industrialized nations, including France. Lower prescription drug spending in France is due to different approaches to managing drug prices, volume of prescribing, and global health budgets. Linking a drug's price to value both at the launch of the drug and over its lifetime is key to controlling spending. Regulations on prescription volume and global spending complement the interventions on prices. If the United States adopted the French approach to regulating drug pricing, Medicare could potentially save billions of dollars annually on prescription drug spending.
Context: Prescription drug spending per capita in the United States is higher than in most other industrialized countries. Policymakers seeking to lower drug spending often suggest benchmarking prices against other countries, including France, which spends half as much as the United States per capita on prescription drugs. Because differences in drug prices may result from how markets are organized in each nation, we sought to directly compare drug prices and pricing regulations between the United States and France.
Methods: For the six brand-name drugs with the highest gross expenditures in Medicare Part D in 2017, we compared the price dynamics in France and the United States between 2010 and 2018 and analyzed associations between price changes in each country and key regulatory events. We also comprehensively reviewed US and French laws and regulations related to drug pricing.
Findings: Prices for the six drugs studied were higher in the United States than in France. In 2018, if Medicare had paid French prices for the brand-name drugs in our cohort, the agency would have saved $5.1 billion. We identified 12 factors that explain why the United States spends more than France on drugs, including variations in unit prices and the volume of prescriptions, driven by use of health technology assessment and value-based pricing in France.
Conclusions: Key drivers of lower drug spending in France compared to the United States are that the French government regulates drug prices when products are launched and prohibits substantial price increases after launch. 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.
Keywords: France; Medicare; Prescription drug prices; United States; drug regulation.
© 2021 Milbank Memorial Fund.