How are drugs priced?

The drug price management modes of major countries in the world can be divided into four categories: the first category: direct pricing of drugs. There are two types: one is direct pricing based on factors such as drug production cost, efficacy and safety. This method is mainly used in Italy, Spain, France, Japan, Switzerland, Australia, India, Romania, Brazil and other countries. It is characterized by deep price intervention and little enterprise autonomy. The other is to calculate the average price and set the price directly according to the actual market price level of neighboring countries. This method is mainly used in the Netherlands, Canada and so on. These countries generally rely on imported drugs, and the domestic drug production is very small, so this method is adopted. The second category: setting the reference price. The reference price for reimbursement of each drug in the same treatment group is the price of a drug in the same treatment group, and the part exceeding this price must be paid by the patient. Countries adopting this pricing method include Germany, Sweden, Denmark, New Zealand and Colombia. This method takes into account the quality differences of similar drugs, gives consumers more choices, and manufacturers also have certain pricing freedom. They can find a more reasonable price position above the reimbursement price according to the market demand and product characteristics. The third category: indirectly control the price of drugs by controlling the profit of drug production. This method is mainly adopted by Britain. The characteristic of this method is that it is convenient for government management; The disadvantage is that the profit rate is controlled too strictly, which is not conducive to encouraging the enthusiasm of pharmaceutical manufacturers. The fourth category: not directly setting drug prices. The representative country is the United States. The perfect medical insurance system in the United States is an important guarantee for its implementation. Although the drug price is not controlled by the government, in essence, private insurance institutions have replaced the functions of the government and intervened in the drug price. Although this method increases the burden of patients' payment, it also greatly encourages manufacturers to develop new drugs. So from 1975 to 1994, 45% of the global 152 new drugs came from the United States. During the rapid development of biotechnology in 1990s, 80% of the 150 biotechnology patents issued by the United States in 1995 came from China. The drug price management modes of major countries in the world can be divided into four categories: the first category: direct pricing of drugs. There are two types: one is direct pricing based on factors such as drug production cost, efficacy and safety. This method is mainly used in Italy, Spain, France, Japan, Switzerland, Australia, India, Romania, Brazil and other countries. It is characterized by deep price intervention and little enterprise autonomy. The other is to calculate the average price and set the price directly according to the actual market price level of neighboring countries. This method is mainly used in the Netherlands, Canada and so on. These countries generally rely on imported drugs, and the domestic drug production is very small, so this method is adopted. The second category: setting the reference price. The reference price for reimbursement of each drug in the same treatment group is the price of a drug in the same treatment group, and the part exceeding this price must be paid by the patient. Countries adopting this pricing method include Germany, Sweden, Denmark, New Zealand and Colombia. This method takes into account the quality differences of similar drugs, gives consumers more choices, and manufacturers also have certain pricing freedom. They can find a more reasonable price position above the reimbursement price according to the market demand and product characteristics. The third category: indirectly control the price of drugs by controlling the profit of drug production. This method is mainly adopted by Britain. The characteristic of this method is that it is convenient for government management; The disadvantage is that the profit rate is controlled too strictly, which is not conducive to encouraging the enthusiasm of pharmaceutical manufacturers. The fourth category: not directly setting drug prices. The representative country is the United States. The perfect medical insurance system in the United States is an important guarantee for its implementation. Although the drug price is not controlled by the government, in essence, private insurance institutions have replaced the functions of the government and intervened in the drug price. Although this method increases the burden of patients' payment, it also greatly encourages manufacturers to develop new drugs. So from 1975 to 1994, 45% of the global 152 new drugs came from the United States. During the rapid development of biotechnology in 1990s, 80% of the 150 biotechnology patents issued by the United States in 1995 came from China.