Drug maker Bristol Myers Squibb just announced plans to sell its new schizophrenia drug Cobenfy at the same price in both the United Kingdom and the United States.
And if the British government refuses, the manufacturer may walk away from the market.
The drug maker's posture portends good news for American patients.
For too long, Britain and other nations have used price controls to underpay for medicines.
As a result, American patients have shouldered a disproportionate share of the globe's research and development tab.
Those days may be over.
It's long past time for foreign countries to pay prices for medicines commensurate with their value — and to quit free-riding on the investments that American patients have been making for decades in pharmaceutical innovation.
The disparity between what Americans pay for prescription medicines and what people elsewhere pay is well known.
According to one recent RAND Corporation analysis, drug prices in the United States are 278% higher than in 33 other developed countries. U.S. drug prices are 270% higher than they are in Britain.
Drug prices tend to be lower abroad because foreign governments forcibly cap them. In the United Kingdom, a government body called the National Institute for Health and Care, or NICE, decides whether the country's National Health Service should pay for a new medicine at the price its manufacturer wants to charge.
NICE's chief metric is the quality-adjusted life year, or QALY — a measurement of the value of one additional year of healthy life.
NICE's estimate for the value of a QALY is low — generally 20,000 to 30,000 pounds, or roughly $27,000 to $40,000.
If a drug delivers one additional year of perfect health for that sum, it's considered cost-effective — and NICE is likely to recommend coverage.
Drugs that fail this cost-benefit analysis generally aren't covered by the government's universal coverage healthcare system.
In many cases, this means denying British patients their best chance at survival.
It seems cruel to place an upper limit on the value of an additional year of life at $40,000 -- a figure that is less than half of America's per capita GDP. But that's effectively what NICE is doing.
Such policies have managed to keep Britain's drug prices artificially low.
Price controls like these are why Americans have been stuck paying more than their peers for drugs. U.S. per capita spending on prescription drugs is roughly double what it is in comparable nations, by some estimates.
That may sound like, as President Trump is fond of saying, we're getting a raw deal.
But our higher prices buy us access to cutting-edge therapies that people in other countries have to wait for — if they get access to them at all.
As of October 2022, British patients had access to just 59% of the 460 medicines launched worldwide between 2012 and 2021. In the United States, patients had access to 85% of those same drugs.
Many of those 460 drugs only came into being because of disproportionate revenue from the U.S. market.
Companies poured money into research and development because they knew they'd have a chance to earn a return on their investment in the United States.
Patients globally — inclusive of those in Great Britain — benefited.
If American prices declined to levels closer to Britain's, then there'd be less money to fund the development of the next generation of therapies.
Patients everywhere would suffer.
Bristol Myers Squibb may be willing to play hardball with the United Kingdom because the Trump administration has been explicit about its desire that foreign countries take on a fairer share of the global bill for pharmaceutical research and development.
But this problem cannot be solved one company or one drug at a time.
Foreign countries still have plenty of ways to underpay for innovative medicines — from threatening to revoke their intellectual property protections, to restricting access to their markets unless companies acquiesce to their demands, to pseudoscientific health technology assessments that undervalue human life.
That's why the Trump administration must approach drug pricing as a trade issue — and insist that foreign governments pay prices far more in line with the market-and-value-oriented ones in force in the United States, rather than pegging U.S. prices to the lower ones in force abroad via a "most favored nation" policy.
Finding ways to level up what people globally pay for drugs would not just ease the financial pressure American patients currently face. It could also fund a new wave of drug discovery and development to the benefit of all humanity.
Sally C. Pipes is President, CEO, and Thomas W. Smith Fellow in Health Care Policy at the Pacific Research Institute. Her latest book is "The World's Medicine Chest: How America Achieved Pharmaceutical Supremacy - and How to Keep It." Follow her on X @sallypipes. Read Sally Pipes' Reports — More Here.
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