The U.S. Wants to Regulate Drug Prices

The U.S. Wants to Regulate Drug Prices

One of the key points of the campaign programs of both US presidential candidates was the regulation of prescription drug prices through Medicare, the national health insurance system for Americans over 65, people with disabilities and those with a number of chronic diseases. Thus, Medicare covers 44 million Americans most vulnerable to serious illness, or about 15% of the country’s population.

At the moment, pharmaceutical companies can arbitrarily set the prices of their drugs, especially those that have no analogues. Both parties are in favor of repealing the laissez-faire rule on prescription drug pricing. Democrats are proposing a method that is disadvantageous for the pharmaceutical sector, which involves direct price regulation without discussion with manufacturers.

According to estimates, the implementation of Biden’s respective plans will reduce the average price of prescription drugs by about 60%. So far, Americans even have to borrow money to afford the purchase of high-cost medication. Online loans Texas are the most popular financial product since they have easy-to-meet borrower requirements. Moany is typically issued for up to 30 days, and loan amounts range between $100 and $1,000. Payday lending policies across the USA are similar, still, there are some peculiarities in every city. Thus, there are 437 lenders that issue payday loans San Antonio and 232 companies that are licensed to provide loans in Austin. Make sure you will be able to repay such a loan on time before signing an agremeent.

Republicans offer a more flexible and complex solution that implies an individual approach to the formation of citizens’ health plans. Prescription drug prices must be negotiated with pharmaceutical companies.

Democrats and Republicans agree that prescription drugs for Americans should cost the same as in other developed countries.

At the moment, the Democratic Party has the majority of votes in Congress, which significantly increases the likelihood of adopting its own version of resolving the problem of drug pricing.

In the Senate, 50 out of 98 votes currently belong to the Republicans (two more seats can be won by one or the other party following the voting in Georgia). It takes 60 votes to pass the bill in the Senate, so the Democratic bill will obviously not be approved. The forces of both parties are equal.

Failure to pass a law regulating the prices of medicines will have a beneficial effect on the entire healthcare industry, as it will mean long-term continued high prices for medicines and high costs of health insurance. The electoral division of the Senate was one of the main reasons for the positive performance in health sector stocks in November.

Given the interest of both parties in regulating drug prices, we consider a compromise on this issue and the adoption of appropriate legislative norms possible. Our baseline scenario assumes a decline in domestic prices for blockbuster drugs to international prices.

We estimate the likelihood of this scenario at 70%. Refusal of regulatory pressure, as well as the prospect of reducing domestic prices for all drugs to the international level, we consider low, the likelihood of both optimistic and pessimistic scenarios is estimated at 15%.

The proposal to reduce the price of drugs in the United States to international levels could be accepted as this clause plays an important role in bipartisan programs. It is important to note, however, that this trade-off does not require significant budgetary expenditures, unlike the Democratic expansion of Medicare coverage. The financial burden falls on pharmaceutical companies, not on an already deficit US budget. But the Senate has a tough job: the parties’ proposed price-cutting options are fundamentally different: Republicans are more likely to compromise with pharmaceutical companies, and Democrats are more authoritarian to control prices through Medicare tools.

According to our estimates, the baseline scenario, which assumes the equalization of domestic prices for blockbuster drugs with international ones, may cause an average decrease in revenue from the sale of pharmaceutical products by 22% for the industry leaders; in the case of a pessimistic scenario, revenue could decrease by an average of 33%. If the law is not passed, there will be no pressure on revenue.

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