Merck's CEO speaks on pharmaceutical drug costs

Merck's CEO Raymond Gilmartin said that the tiered co-pay system in the U.S., which is set up by health plans and pharmacy benefit managers, helps keep drug prices competitive, a news source reports in an interview with the executive.

"Now we have tiered co-pays -- generics on the first tier, the second tier has preferred drugs, and the third tier with higher co-pays. That's the intensified level of price competition," Gilmartin is quoted as saying. "It's been very effective in controlling the price at which new drugs are introduced."

While some are pushing for reimportation from Canada to spur competition, Gilmartin said that is only reflective of government price controls in Canada. Whereas, in the U.S., the competition actually occurs on the level of the managed care health plan. He also said that reimportation is a safety risk, and the better solution is for the U.S. to institute prescription drug coverage and health insurance. "People with health insurance don't have to go on the Internet or take a bus to Canada," he said.

When asked why other nations do not have the problem of rising drug prices that the U.S. has, Gilmartin said, "Europe has paid a price for price controls. The European pharmaceutical industry has declined, while the U.S. industry has discovered more than 70 percent of drugs in the world." He also noted that as soon as a drug is approved in the U.S. there is instant access to it, whereas in Canada or Europe it can take as long as a year or two to enter the marketplace, the news source reports. If price controls were instituted in the U.S. there would be a loss of "innovation, jobs and contribution to the economy as well as contributions to health," he said.

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