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| Examples of Price Controls in Various Countries |
United States
Section 340B of the Public Health Service Act sets price controls for pharmaceuticals purchased by certain government agencies and to certain grantees of Federal agencies. It provides that as a condition for participation in Medicaid, drug manufacturers must sign a pharmaceutical pricing agreement - includeing specific price ceilings - with the Secretary of the Department of Health and Human Services.
The Patent Act of 1987 created the Patented Medicine Prices Review Board PMPRB, which regulates drug prices using a public set of guidelines (see below). To ensure this independence and autonomy, the Act provides no power to the government to direct the Board or to review its decisions and orders. However, decisions of the Board are subject to judicial review by the Federal Court of Canada on jurisdictional or procedural grounds in accordance with administrative law principles.
PHARMAC, the Pharmaceutical Management Agency, is a Crown entity established pursuant to the New Zealand Public Health and Disability Act 2000. PHARMAC is directly accountable to the Minister of Health. The PHARMAC Board consists of up to six members appointed by the Minister of Health. All decisions relating to PHARMAC's operation are made by or under the authority of the Board. In particular, the Board members decide on the strategic direction of PHARMAC and may decide which pharmaceuticals should be subsidised and at what levels, and whether or not special conditions or guidelines are to be applied.
In general, PHARMAC will not apply a subsidy to a new medicine unless it is offered at a price lower than currently available subsidized medicines in the same therapeutic class or unless the producer is willing to lower its price on another medicine already subsidized in another class. Pharmaceuticals can also be delisted if a competing product is selected to serve the market as the result of a tender or if a cheaper alternative becomes available and the manufacturer of the original product refuses to discount its price to that of the lower-priced alternative. PHARMAC's use of reference pricing, the practice of doing trade-off deals between classes of drugs, and tendering practices can negatively affect a company's revenue return on its intellectual property.
| USTR Documents On Pharmaceutical Price Controls Abroad |
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