Prescription Drugs: Prices and Regulation in Canada and Europe

GAO discussed international regulation of prescription drug prices, focusing on the effects on pharmaceutical prices, expenditures, and research and development. GAO noted that: (1) brand-name prescription drugs are usually priced higher in the United States than in other countries; (2) although five countries have adopted policies and regulations to control prescription drug prices and expenditures, the policies have been more effective in limiting prices than expenditures because of the increase in drug use; (3) the effect of prescription drug prices on pharmaceutical firms' research and development costs is difficult to calculate; (4) lower drug prices cause a decrease in drug firms' research and development costs; and (5) the effect of similar policies on drug pricing in the United States could differ from the other countries' experiences because of the size of the U.S. market and institutional differences.