Compiled Annotations

Adams, Christopher P., and Van V. Brantner. “Estimating The Cost Of New Drug
Development: Is It Really $802 Million?” Health Affairs25.2 (2006): 420–428.
Web. 27 Sept. 2017.

The purpose of this article was to replicate the drug development cost estimates of
Joseph DiMasi in his article “The Price of Innovation. ” The article written by DiMasi
estimated that the cost per new drug to enter human clinical trials (between 1989
and 2002) was 868 million dollars. This number has been up for debate though. This
article estimated that it would cost a drug company $310 million to get a drug
approved to go to market. The article provided more statistics on the cost of getting
new drugs approved. This article was written in 2006, so it is very possible that the
price to pharmaceutical companies has gone up. Also, the article did not attribute
the costs to any specific things. This shows that pharmaceutical companies spend a
lot of money and expect to be paid back a lot when drugs go to market

Cohen, Robin A., and Maria A. Villarroel. “Strategies Used by Adults to Reduce Their
Prescription Drug Costs: United States, 2013.” NCHS Data Brief, no. 184, Jan.
2015, pp. 1–8.

This research paper looked at what adults tended to do when faced with high
prescription drug prices. The author concluded that Differences in cost-saving
strategies by insurance coverage might be interrelated with socioeconomic and
other patient characteristics. Strategies used to reduce cost were not taking
medication as prescribed, buying drugs from another country, using alternative
therapies, and asking a doctor for a lower-cost medication. The author breaks down
the percentage that uses each of these methods by their insurance (private,
Medicaid, Medicare, and uninsured). The author also looks at the effect of age on
method used to lower the price of the drugs. This article provides many statistics
that show the negative effects of high prescription drug prices.

“Emanuel: Regulation Needed to Keep Drug Prices Reasonable.” CNBC, 10–16 Oct.
2016,

This is a video clip of the CNBC show “Squawk Box”, where Dr. Ezekiel Emanuel is
interviewed on the regulation of pharmaceutical pricing. Dr. Emanuel was one of the
architects of The Affordable Care Act. He believes that drug companies currently
have a monopoly on the market due to exclusivity patents and the long Food and
Drug Administration (FDA) approval process. Dr. Emanuel supports government
regulation and efforts to speed up the FDA approval process for generic drugs. Also,
Dr. Emanuel said that drugs with generics often hit prices that are too low, which
ends up curbing innovation. He also predicted that the government is heading in the
direction of imposing price ceilings and floors on drug prices within the next 4 to 6
years.
Goldman, Dana P. et al. “Regulating Drug Prices.” Product Page. N.p., 2008. Web. 25
Sept. 2017.

This article was published by the RAND Corporation, which does a lot of research on
policy and the economic impacts. The article concluded that price controls reduced
life expectancy over time. The article did not define a specific method of price
controls, which may make the findings different. In addition, the article is a
summary of two other articles written by other RAND employees, which could be
useful articles for reference.

Halpenny, Genevieve M. “High Drug Prices Hurt Everyone.” ACS Medicinal Chemistry
Letters,vol. 7, no. 6, June 2016, pp. 544–546

This article looks at the recent trend of pharmaceutical companies’ recent price
gouging in the United States. The article has somewhat of a bias against the
pharmaceutical companies, as it blames them for the high drug prices. According to
the author, pharmaceutical companies only spend around 20% of their sales on
R&D. The article also provides a helpful graph, which compares the drug prices in
the United States to other countries. The article also showed that the United States
has some of the highest drug prices in the world. As a policy measure to address the
issue of price gouging, the author discusses the possibility of adding protections
against price gouging to existing antitrust law.

Kanavos, Panos. “Reference Pricing For Drugs: Is It Compatible With U.S. Health
Care?” Health Affairs3 (2003): 16–30. Print.

This article discussed the possibility of using Reference Pricing for U.S. drugs.
Reference Pricing is when insurers only cover the prices of low-cost drugs in a
certain cluster for patient. If a patient wants a higher-price substitute, they have to
pay the difference between the cost of the lower price drug and the higher price
drug. Reference Pricing can be on the federal level or it can come from the individual
insurers. There are also a number of challenges involved with creating a Reference
Pricing system. Some of these challenges include creating clusters of substitute
drugs, pushback from the pharmaceutical industry, physicians only prescribing the
low cost drug, and a decrease in pharmaceutical R&D. Overall, reference pricing
seems like a very viable solution to reduce the price of drugs, but the possible effects
may outweigh the lowering of the price.

Kanavos, Panos et al. “Higher US Branded Drug Prices And Spending Compared To
Other Countries May Stem Partly From Quick Uptake Of New Drugs.” Health
Affairs 32.4 (2013): 753–761. Web. 22 June 2017.

This article compared the spending on prescription drugs in Economic Cooperation

and Development (OECD) countries. The article found that prescription drug prices
in the United States were anywhere from 5 to 198 percent higher than the other
countries in the years observed. The researchers only focused on brand name drugs
that were under patent protection, which would be the drugs that are the most
expensive. The article also stated that the U.S. spent the most on prescription drugs
in 2010.

Kessler, Daniel P. The Effects of Pharmaceutical Price Controls on the Cost and Quality
of Medical Care: A Review of the Empirical Literature.

This article looks at the adverse effects of price regulation of prescription drug
prices. The author also concludes that prescription drug prices should not be
regulated. The article does not provide any new analysis or information on the topic,
but compiles and reviews the literature on the topic. The author supports the idea
that price regulation will reduce quality of care. This is supported by the fact that it
will decrease pharmaceutical Research and Development (R&D). The author also
claims that reference-pricing policies are biased against innovative drugs. In
addition, the author refers to an article that showed the effect of possible
pharmaceutical regulation on the stocks of drug companies. Overall, this article
provides the counterargument to regulation and refers to many possibly helpful
sources. On the other hand, many of these sources are outdated.

Lee, Joy Li-Yueh, et al. “A Systematic Review of Reference Pricing: Implications for
US Prescription Drug Spending.” The American Journal of Managed Care, vol.
18, no. 11, Nov. 2012, pp. e429–37.

This article is a literature review of articles published about reference pricing. The
article is a little bit outdated as it only looked at articles published before 2012, and
a lot has happened in the pharmaceutical industry since that time. The articles that
were reviewed for this paper covered reference-pricing policies for many countries
besides the United States. The paper cited that 4 reference pricing policies instituted
were associated with a mean price reduction of 11.5%. Furthermore, three studies
that this article cited found out-of- pocket savings ranging from 12% to 18% per
month with reference pricing policies. This article did not present any new
information on reference pricing, but it provided a plethora of references to other
research done on reference pricing.

Leopold, Christine, et al. “Effect of the Economic Recession on Pharmaceutical Policy

and Medicine Sales in Eight European Countries.” Bulletin of the World Health
Organization, vol. 92, no. 9, Sept. 2014, pp. 630–40D,
doi:10.2471/BLT.13.129114.

This article looked at pharmaceutical policy changes with respect to a countries’

economic standpoint. The article concluded that less economically stable countries
implanted more pharmaceutical policy changes than countries that had stable
economies. The countries covered in the study are Austria, Estonia, Finland, Greece,
Ireland, Portugal, Slovakia and Spain. The authors also found that some countries
implemented price-cutting policies, and these policies decreased availability of
pharmaceuticals, as drug companies withdrew drugs from the market.

Morgan, Steven G., et al. “Drivers of Expenditure on Primary Care Prescription Drugs
in 10 High-Income Countries with Universal Health Coverage.” CMAJ:
Canadian Medical Association Journal = Journal de l’Association Medicale
Canadienne, vol. 189, no. 23, June 2017, pp. E794–E799,
doi:10.1503/cmaj.161481.

This article looked at the price differences in prescription drugs between countries
that have universal health coverage. Most of these countries are a part of the
European Union. The article found that countries with a single payer universal
healthcare system usually had lower prices than countries that had multiplayer
systems. Out of the countries studied, Sweden had the lowest drug expenditure per
capita while Canada had the greatest. This article provided many helpful statistics
and a lot of new ideas on

Neumann, Peter J., and Joshua T. Cohen. “Measuring the Value of Prescription
Drugs.” New England Journal of Medicine, vol. 373, no. 27, Dec. 2015, pp.
2595–2597, doi:10.1056/NEJMp1512009.

In this article, the authors Peter J. Neumann and Joshua T. Cohen advocate for a
value based approach to prescription. The compare a value based approach to that
of when consumers go to buy a new car, the pricing is based on the cars features.
Also, cost-effectiveness puts all the drug prices on the same playing field. The
problem with this approach is that the pharmaceutical options will be diminished
for people with rare conditions since the drugs for rare conditions will be valued
less than those for common conditions.

Robinson, James C., et al. “Association of Reference Pricing with Drug Selection and
Spending.” New England Journal of Medicine, vol. 377, no. 7, Aug. 2017, pp.
658–65, doi:10.1056/NEJMsa1700087.

In this article the authors compared the drug prices between RETA Trust and a
labor union that had similar health insurance system. Reference pricing was
instituted in the RETA Trust insurance structure, but not the labor union’s structure.
The authors found that RETA Trust paid prices were 13.9% lower than those paid
by the labor union without reference pricing. This translated to an average price
that was $9.24 lower per monthly prescription for the RETA Trust than for the
union trust. The article also broke down the highest and lowest prices for drugs by
each therapeutic class. This article provided many helpful statistics on drug prices.
Salter, Marie. “Reference Pricing: An Effective Model for the U.S. Pharmaceutical
Industry?” Northwestern Journal of International Law & Business, vol. 35, no.
2, Summer 2015, pp. 413–438.

In this article, the author discussed the possibility of a reference pricing system in
the United States. Reference pricing is when an insurance company or government
clusters drugs and determines the price they will pay for based on the average of the
clusters. The consumer can get a drug from that cluster for that price, or pay the
difference if they want a more expensive drug in that cluster. The main problem
with this system could be the clustering technique. If the drugs are clustered based
on active ingredient, companies would try to make biosimilars (drugs with same
function but different active ingredient). The author also provides empirical
evidence on how price controls have been successful in European countries. Also,
according to the author, the U.S. is the top producer of new drugs.