Drug Licenses

A New Model for Pharmaceutical Pricing

Published in: Health Affairs, v. 27, No. 1, Jan.-Feb. 2008, p. 122-129

Posted on RAND.org on December 31, 2007

by Dana P. Goldman, Anupam B. Jena, Tomas Philipson, Eric Sun

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High drug prices are a major barrier to patients' access to drugs and compliance with treatment. Yet low drug prices are often argued to provide inadequate incentives for innovation. We propose a drug-licensing model for health care, which has the promise of increasing drug use without altering patients' out-of-pocket spending, health plans' costs, or drug companies' profits. In such a model, people would purchase annual drug licenses that would guarantee unfettered access to a clinically optimal number of prescriptions over the course of a year. Using the example of statins, the authors illustrate how such a model could be implemented.

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