Drug Pricing Study

AGENCY:

International Trade Administration, Commerce.

ACTION:

Notice of hearing.

SUMMARY:

Information is sought related to a study of international drug pricing, mandated by Section 1123 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act). This information will contribute to a report on trade in pharmaceuticals, focusing on the drug pricing practices of countries that are members of the Organization for Economic Cooperation and Development (OECD) (specifically Canada, Poland, France, Germany, United Kingdom, Japan, Switzerland, Greece, Australia, Korea, and Mexico) and the effects of those practices on drug pricing in the United States, research and development, and innovation. The Department is therefore holding a public hearing on August 3, 2004, and requesting written testimony in advance of the hearing.

DATES:

Notification of intent to testify and written testimony should be submitted no later than 5 p.m. August 2, 2004. The hearing will be conducted on: August 3, 2004. For members of the public who are unable to attend the public hearing or who wish to submit rebuttal comments, ITA will accept comments from August 3 until August 13, 2004.

ADDRESSES:

Schedule time for testimony and submit written testimony through Kristie Mikus: Department of Commerce, 14th and Constitution Avenue, Room 4053, Washington, DC 20230, e-mail drugpricing@ita.doc.gov; telephone (202) 482-0131; fax (202) 482-2565. The hearing will be conducted at: Department of Commerce, 14th and Constitution Avenue, Room 3407, Washington, DC 20230, on August 3, 2004.

FOR FURTHER INFORMATION CONTACT:

For further information, please contact Kristie Mikus at (202) 482-0131 or at drugpricing@ita.doc.gov.

SUPPLEMENTARY INFORMATION:

The International Trade Administration (ITA) publishes this notice of a public hearing to solicit information, as mandated by the Act. The hearing will take place on August 3, 2004 at 9 a.m. at the Department of Commerce, 14th and Constitution Avenue, Room 3407, Washington, DC, and will conclude at 5 p.m. or the close of business.

The Act directs the President's designees to conduct a study and report on issues related to trade and pharmaceuticals. Public Law 108-173, 117 Stat. 2066, 2469. Legislative history provides additional information concerning Congress' intent on the matter. Specifically, Conference Report 108-391 directs the Secretary of Commerce, in consultation with the International Trade Commission, the Secretary of Health and Human Services and the U.S. Trade Representative, to conduct a study and produce a report on trade in pharmaceuticals, focusing on the drug pricing practices of countries that are members of the OECD. Specifically, the Conference Report to the Act states:

“Report on Trade in Pharmaceuticals”

The Conference agreement directs the Secretary of Commerce, in consultation with the International Trade Commission, the Secretary of Health and Human Services and the United States Trade Representative, to conduct a study and report on drug pricing practices of countries that are members of the Organization for Economic Cooperation and Development and whether those practices utilize non-tariff barriers with respect to trade in pharmaceuticals. The study shall include an analysis of the use of price controls, reference pricing, and other actions that affect the market access of United States pharmaceutical products.

The study shall include the following:

Identification of the countries that use price controls or other such practices with respect to pharmaceutical trade.

Assessment of the price controls and other such practices used by the countries identified.

Estimate of additional costs to U.S. consumers because of such price controls and other such practices, and the extent to which additional costs would be reduced for U.S. consumers if price controls and other such practices are reduced or eliminated.

Estimate of the impact such price controls, intellectual property laws, and other such measures have on fair pricing, innovation, generic competition, and research and development in the United States and each country identified.”

ITA previously published a Request for Comments on June 1, 2004, Federal Register, Volume 69, Number 105, Page 30882-30883. The comment period for this request for comments closed on July 1, 2004. However, additional information is needed to complete the report for Congress. Consequently, the Department is seeking input to the following questions. However, in responding to these questions, please feel free to also include any relevant additional information or input. Individual testimony will be limited to 15 minutes. Because of the finite amount of time available during the public hearing, ITA may not be able to accommodate everyone who expresses an interest in testifying at the hearing. Therefore, ITA will provide an additional comment period between August 3 and August 13 to allow the public to submit comments on the questions below or in response to testimonies.

• How do OECD countries set pharmaceutical prices? Within OECD countries, what mechanisms do governments use to control pharmaceutical expenditures?
• If price controls and other government cost control mechanisms were eliminated in OECD countries, how and to what degree would pharmaceutical prices and expenditures change? What effects would these changes have on the sales and profits of pharmaceutical manufacturers?
• How do patent laws and their application affect prices of patented drugs in OECD countries?
• If price controls and other government cost control mechanisms were eliminated in OECD countries, what effect would there be on U.S. consumers?
• What factors influence, and how do companies determine research and development (R&D) expenditures? How would R&D be affected by higher prices and revenues from sales in OECD countries?
• What is the relationship between increased R&D by pharmaceutical manufacturers and the introduction of new drugs?
• Could OECD countries reduce costs by increasing the use of generic drugs? What steps would the governments need to take to facilitate the use of generic drugs?
• Are there means by which OECD countries could improve incentives for developing innovative medicines without significantly increasing spending on drugs?

Once completed, the report produced by ITA will be submitted to Congress and made available to the public.