Differential Prices
Do Americans pay higher prices for pharmaceuticals than people in other rich countries?
How can we encourage lower prices for poor countries?
- David B. Ridley. "International Price Comparisons for Novel and Follow-On Drugs." Value in Health. 2007. Vol. 10, No. 6: 510-511.
Prices for novel drugs tend to be about the same in the U.S. as in other rich countries,
prices for less novel drugs tend to be higher in the U.S. than in other rich countries (but this does not account for confidential rebates),
and prices for generic drugs tend to be lower in the U.S. than in other rich countries because the large U.S. market attracts many generic
competitors which compete down generic prices.
- Margaret K. Kyle and David B. Ridley. "Would Greater Transparency and Uniformity of Health Care Prices Benefit Poor Patients?" Health Affairs. 2007. Vol. 26, No. 5: 1384-1391.
Prices are transparent when the buyer knows his or her price or knows prices paid by others, in advance.
Transparent prices inform consumers of expected costs and reveal when sellers are charging high prices to poor people.
Under some conditions, however, price transparency can increase prices paid by the poor, deter business entry in poor markets,
reduce competition, lower investment, and mislead if inaccurately measured by a third party. We recommend alternative approaches
to lowering prices for the poor and increasing efficiency.
- David B. Ridley. "Price Differentiation and Transparency in the Global Pharmaceutical Marketplace." Pharmacoeconomics. 2005. Vol. 23, No. 7: 651-658.
The World Health Organization's well-meaning effort to compare
the price of a given molecule across manufacturers and across countries has insufficient adjustments for drug quality variations;
uses price ratios rather than price levels; artificially measures countries’ wealth (for example, using a country’s lowest-paid unskilled government worker);
disregards patents; is too slow in adjusting to changes in prices, inflation, and exchange rates; and requires procurement prices which are difficult to obtain since rebates and discounts are often confidential.
- David B. Ridley and Kevin A. Schulman. "Differential Pricing of Pharmaceuticals in the Internet Age." Journal of Ambulatory Care Management. 2004. Vol. 27, No. 3: 210-214.
The Internet provides healthcare consumers with more information about available prices
and provides pharmaceutical manufacturers with more information about consumers' willingness
to pay. The former effect tends to undermine price differences while the latter tends to support
them. We expect the former effect to dominate and the Internet to undermine differential pricing
of pharmaceuticals.
Health Care Costs
How costly is post-approval drug safety? How costly is hospital inefficiency?
- David B. Ridley, Judith M. Kramer, Hugh H. Tilson, Henry G. Grabowski, and Kevin A. Schulman. "Spending on Postapproval Drug Safety." Health Affairs. 2006. Vol. 25, No. 2: 420-8.
Withdrawals of high-profile pharmaceuticals like Vioxx focused attention on post-approval safety surveillance.
We surveyed drug manufacturers and found that mean spending on postapproval safety per company in 2003 was $56 million
(0.3 percent of sales).
Assuming a constant safety-to-sales ratio, we estimated that total spending on postapproval safety by the top twenty drug
manufacturers was $800 million in 2003. This study is the only systematic estimate of post-approval spending to be published and
helped inform the Institute of Medicine inquiry into drug safety.
- Bimal R. Shah, Shelby D. Reed, Jennifer Francis, David B. Ridley, and Kevin A. Schulman. "The Cost of Inefficiency: A Look at US Hospital Overhead Costs from 1985-1997." Journal of Health Care Finance. 2003. Vol. 30: 1-9.
We examine hospital cost-cutting efforts. We find that
hospital administrators exerted considerably less effort reducing overhead costs than hospital beds.
Had administrators exerted the same pressure on overhead costs
as on beds, the average hospital could have saved $4.6 million annually from 1985 to 1997, or $16.5 billion annually for the US.
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