Policies abroad

According to a 2004 study in the "Quarterly Journal of Economics," spending on pharmaceuticals in Organization for Economic Cooperation and Development (OECD) countries has increased by an average of 32% in real terms since 1998, reaching more than US $450 billion in 2003. The kicker? The growth in pharmaceutical spending varies greatly between countries. For example: In the US, the annual growth of 9.6% was nearly three-times the growth rate of spending in Germany, at 3.5%.

Of course, that's not to say that other countries have found the way of the Buddha. In fact, in 2008, the UK completely scrapped its pharmaceutical price regulation scheme (PPRS). Under the PPRS, companies were allowed to set their own prices when launching new medicines, but in return must keep their UK-earned profit margins within an agreed limit. Any excess profits had to be refunded to the state-run National Health Service (NHS).

As of January this year, however, the UK put an immediate price freeze on drug prices, followed by a 5% price cut. Ironically, like many in the US, some UK experts were hoping to move toward a value-based pricing system (VPB). But again, much like the US, value means different things to different people.

In Canada, the government has established the Patented Medicine Prices Review Board, which is responsible for regulating the prices companies charge for their patented medicines to ensure that they are not excessive. And, like the UK's NICE and the US's new Comparative Effectiveness Research Institute, Canada has their Common Drug Review. Of course, rumor has it that the US's CERI has little clout - with not enough funding to conduct independent studies and no oversight authority.

And then there's China: China slashed drug prices 19 times between 1997-2006. Their latest regulation requires a 5-step procedure before fixing medicine prices, including production cost investigation, expert evaluation and hearing opinions from the public. Furthermore, the new rules forbid drug price regulators from taking gifts of any forms or receiving invitations for banquets and traveling abroad from drug manufacturers.

Ahh...The perks of having a centralized, all-powerful governing body.