Global Prices For A Global Market

For decades, big pharmaceutical companies have priced their products differently around the world. Americans pay the most for the latest drugs, while those in Europe, Canada, Australia, Japan, and other advanced countries pay significantly less. The higher profits generated in the U.S. go into drug research and development, benefiting everyone.

But the international price differentials, so key to the business model of giant drug companies, are being eroded by economic, political, and technological forces. Prozac, Vioxx, and other drugs sold more cheaply in Canada, Mexico, and elsewhere by U.S. companies are pouring back into American retirement communities from Florida to Arizona. Illinois may import drugs to lower its Medicaid costs. And Congress may soon allow some reimporting of drugs from Canada. It's time for Big Pharma to rethink its pricing policy. To generate the profits needed to finance new drug development, it should begin raising prices for wealthy countries outside America and lowering them inside the U.S.

An ad in a Palm Beach (Fla.) newspaper for Mediplan Pharmacy in Canada shows why Big Pharma must act. It lists prices from its Web site: 90 doses of Zoloft, 100 milligrams each, costs $142.40, vs. $232.68 in the U.S. Lipitor is offered at $172.38, vs. $311.80 in the U.S.

A more integrated pricing structure for wealthy nations (with special low prices for poor countries in Africa and elsewhere) may be inevitable. Like it or not, a global market means global pricing.

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