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Idea of the Day: Learning from Germany’s Reform of Its Prescription Drug Market

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As federal minister of health in Germany, Daniel Bahr oversaw the implementation of wide-reaching reforms to Germany’s prescription drug market. In a new CAP paper, he offers his unique perspective to explain these reforms and how the United States can learn from Germany’s example.

Rising prescription drug prices have posed a challenge to health care systems all over the world. This is particularly true in the United States, which has the highest prescription drug prices among major countries, paying more than twice as much as countries such as Australia and the United Kingdom. Although drugs continue to increase in price, we often know little about whether improvements in the effectiveness of these drugs are keeping pace. Many other countries evaluate drugs by funding comparative effectiveness research, or CER, which evaluates the clinical effectiveness of two or more medical treatments, drugs, or medical devices. Alternatively, some countries focus on cost-effectiveness and prefer cost-benefit analyses, which contrast the price of a drug against the added benefit to patients. While the consideration of cost is controversial in many countries, including the United States, CER considers only the differences in clinical benefit for patients between two or more treatments.

Since the United States has traditionally underinvested in CER and consequently suffers from a lack of meaningful comparative information on medical treatments, the Affordable Care Act created the Patient-Centered Outcomes Research Institute, or PCORI, to publicly fund CER in the United States. As PCORI decides how to allocate its substantial research funding, it should look abroad to see how other countries have successfully funded and utilized high-priority CER.

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This is part of a regular column: Idea of the Day

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