announcer: "washingon journal" continues. host: john dicken is with the government accountability office, the director of the public health and private markets division. here with us to talk about a noose study -- a new study that was done. welcome to "washington journal. guest: good morning, thank you. host: tell our viewers and listeners of the role of the government accountability office. guest: the government accountability office, gao, is an independent nonpartisan

congressional agency. often called the government watchdog. we do evaluations of federal programs, federal policies, federal spending at the request of congress, and of leadership in both parties, and so those reports become publicly available, both the congress and the general public. host: john dicken is joining us to talk about one of those evaluations, one of those studies requested by congress. the name of the report is "prescription drugs: u.s. prices on average than prices in australia, canada, and france." who asked you to do this report? caller: -- guest: we have had a body of work on prescription drug pricing by a number of different committees, both republican and democrat. this particular report comparing u.s. with international prices

was requested by senator -- and his role as chair of the budget committee. host: is this an area you had not looked into previously, gao? guest: the gao has done a lot of work on the u.s., looking at a number of different public programs -- medicaid, medicare, v.a., dod -- big payers for prescription drugs also looking in the private sector. gao had not done for more than a decade, comparing how the u.s. prices look when looking at other -- reflecting other company -- other countries that have a high per capita income. host: give us a sense of the brand name pharmaceuticals you have compared to other countries. guest: we look at two brand-name

drugs that were a large part of spending and use in the medicare script drug program, and so in the end, we had 41 drugs that represent significant spending on prescriptions and medicare and that were also available in at least one of three other countries -- australia, france, canada. 20 of those were available in all three countries as well as the u.s., and one example that we traced through with different prices was so nor elect, a commonly prescribed drug for pulmonary obstructive disease. there were 21 drugs that we compared in at least in those countries. host: viewers can read that at gao.com. some of the findings include this. gao's analysis of 2020 data found that 20 selected

brand-name prescription drugs, estimated u.s. prices paid at the retail level by consumers and other payers such as insurers were more than two to four times higher than prices in three selected comparison countries. we mentioned those comparison countries -- australia, canada, and france. is there a why behind that, john dicken? guest: there are a number of reasons to why prices might be higher in the u.s. compared to other countries. and some of those issues are that the country is -- that is true in australia and france, not in the u.s. or canada. whether or not they have regulations that affect drug problems -- jug prices that may -- drug prices that affect the ceiling on the prices. the u.s. has individual

programs, individual public programs but not a national approach to regulating drug prices. a third reason is differences in distribution and supply chain for drugs in the u.s.. there are a lot of entities between the manufacturer and the pharmacy that include wholesalers, health plans, pharmacy benefit managers, and so there is a complex supply chain where a number of entities , each of which the money flows through and people get paid for services. two last quick reasons, manufacturers point to the u.s.'s payment for research and development and innovation, and certainly we saw that the u.s. has contributed a larger share of its economy to development for prescription drugs, but that alone does not account for the differences we saw in other countries. the last factor i would note at

a high level is valuing the choice of drugs, and so often higher cost drugs may be available. they offer smaller -- strong therapeutic advantages, whereas other countries may limit the choice to those who have therapeutic advantages at a certain cause. host: we are talking with john dicken. they looked in comparing with several other countries and we would love to hear from you. the lines are 202-748-8000 for the eastern and central time zones. 202-748-8001, fountain and pacific. particularly if you bought drugs in canada or whatever and had that experience or book drugs from pharmaceuticals overseas. we would love to hear your experience on that. john dicken, i want to go back this point. part of the summary of your reports is that each of the four

countries use pricing strategies to limit the price of drugs, but the united states is the only country in our review that does not have the overarching pricing strategy for prescription drugs, although it is publicly funded coverage. such as medicaid. is there a why behind there is not a he u.s. pricing strategy? what do those strategies look like in other countries? guest: really in the u.s., as you know, the number of different payers, we rely in large part or in private health plans to offer through employers come through medicare, and so each of those programs have different statutory authorities for prices, for different buildings to negotiate with manufacturers. so certainly each plan has both

strategies for how they are negotiating prices. but that is across different tiers. in australia and france and canada, there are national approaches that could do things like set ceiling prices. that would be the maximum amount that would be paid for drug limits, the rate of increase of drugs after they have been on the market for a while, and then they compare those drug prices to other countries or other benchmarks. so those apply within individual health plans in the u.s., but it does not apply uniformly in the way it is in australia. host: i wanted to point out the chart you have in the report looking at the u.s. in three other countries and the cost per capita of a pharmaceutical -- of pharmaceutical spending. her year. age 65 -- 806 to five dollars

per year in canada. 671 in france per person. australia, 651 per person, and in the u.s., 1200 -- 1229. in terms of gdp, it has the highest in the four countries compared in terms of spending. does that surprise you? guest: i think that is prominent in the u.s., not just for prescription drugs but for health care services. not only in dollar amounts. the $1200 personal per person that individuals thank for prescription drugs, but also the economy. i think that was expected. what our report shows us is a big factor in that is just the prices of the drugs themselves. it affects both the prices and the amounts, and this report

shows the actual price for the exact same drug is significantly higher for brand-name drugs that we looked at in the u.s. and other countries, which contributes to why the country is spending more. host: john dicken, talking about the cost of prescription drugs. we will hear from jim in east lansing, michigan. good morning. go ahead. caller: thank you very much. drug prices you're talking about now? i think they are very high. there is no excuse for that. they are so darn high. my son is on this one that is like $3000 to $6,000 a month because he had a kidney replaced, so he had to get that one --

host: in the other countries, are pharmaceuticals covered by health care in australia and france? guest: yes, they are covered in two of the countries. australia tends to have universal coverage with prescription drugs. candida famously has universal coverage for physicians, for the hospitals. it does not include prescription drugs as part of its potential universal coverage system. like the u.s., there are some people that may not have insurance coverage. many get coverage through their employers or purchase private plans, or through public programs. australia and france have the universal coverage in the u.s., and that can lead like the caller, thank you for sharing your experiences with some high cost drugs. having those people paying

either the full cost or the high cost sharing of drugs. if they are not as strong as the health plan to have lower caution. host: your report looked at namebrand prescription drugs. any idea how generic drugs compare overseas to the u.s.? guest: that is an important question. part of the report is only looking at brand-name drugs. generics are the majority of spending for prescription drugs in the u.s., even though they are only less than 20%, 10% to 20% of the number of drugs. generics play a very important role in the u.s. those prescribed in the u.s. are generic. while this report did not -- we only looked at brand-name drugs. we have lots of generic drug prices in the u.s. before, and

the key issue there is if there is competition, they are very low. they may lower in the u.s. but in other countries. but we also saw some exceptions for us that may be generic that are on the markets for a long time. and there were some sterner prices with drug stripling overnight. even in the generic tread market. those are the exceptions. very competitive as long as there is competition. host: from birmingham, alabama. caller: good morning. my thing about those drugs is that we live in a capitalistic society, so you have got the

government not regulating, but as far as the -- i personally have diabetes. and diabetes is an expensive disease. in all the drugs that -- they advertise. the fact that i cannot pronounce the name of a drug means they have a commercial. if they have a commercial, then i cannot afford it. so what happens is they would get nba approval -- fda approval for the medication, and then you cannot afford it. so once you cannot afford it, then you have -- like what i did was took my formulator. since i could not the -- i could not afford the drugs they were asking me to get, i took my formulary from my insurance

company and ask them -- because they have different tiers. they have them look at something that is older, that i can use in place of what they were trying to get me to get. host: i will let you go there and get some response from john dicken. guest: thank you for sharing your experience. three brief things that you mentioned that are really important, one is insulin and diabetes. insulin is a key part of diabetes treatment. he has been a drug that has a lot to do with high pricing increases, so you're not alone in seeing that there are very high costs for diabetes. secondly, what you did and what people do is that if they have their drugs, to look at their health plan and the formularies,

which is what the plan covers or prefers come and see if there are alternatives that your doctor and the pharmacy and the health plan would recommend. to the last point you mentioned, consumer advertising of drugs, which is prevalent in the united states, not used in other countries. the gao is also looking at and will be issuing a report in the next month, looking at the extent of spending for direct contact -- direct consumer advertising in line with medicare spending for drugs. host: there was news about the administration waving supportive patents on the covid-19 -- it is the temporary waiver of international property divisions to produce the covid-19 vaccine.

john dicken, what role do these intellectual patents play in terms of the cost of prescription drugs both here and how that affects cost overseas? guest: certainly intellectual property is an important aspect of pricing because research and the public sector, extensive research in the industry could be high cost. there is a breakthrough or innovation that -- that u.s. law and international -- also other countries provide intellectual property rights. we have a section use the form of the drawer for a put two of time.

encouraging that information and research, it will limit competition. what you gave, gao is continuing to look at vaccines. we also looked at remdesivir, which is a treatment that has been used as a treatment for covid. looked at the role of intellectual policy and patents in those specific areas. so a key issue both for innovation as well as competition and prices for drugs. host: next, from staunton, virginia, we hear from david. caller: good morning and thank you for taking my call. i've got just a couple of questions. number one, i am a retired come on medicare, so the part b helps quite a bit on the pricing. but i have noticed recently that the pricing on a few of the drugs -- in particular i will mention one -- it went from $43

to $216 for a month's supply. and the people said at the pharmacy that if they had gotten into the doughnut hole, with the cap. it was my understanding that that was supposed to be eliminated in 2020. but it is also my understanding that either congress did not act on it or the white house did not act on it, but i don't know what happened there. the second question was that last year i think the trump administration negotiated a price of insulin for 35 a month, but yet i don't think that applies anymore. don't know why. and then i will just hang up and listen to the response. thank you. guest: the drug you mentioned was one of the 40 that we looked

at, and as you noted, what we had for 2020 was that the average retail price for that includes both the cost-sharing that you and other individuals would pay as well as for medicare or other peers. it was up 760 one dollars. that was then reduced, paid by manufacturers to help plans, notably to $386 per one month supply. in australia, or in france, up $76. drug prices for the exact same drug or much higher in the u.s.. you mentioned the doughnut hole. over time since medicare part d was implemented, manufacturers have agreed to statutorily --

agreed statutorily that they will provide some of the payment so that individuals are not paying 100% anymore. i believe it is about 70%. but there is still a doughnut hole where individuals are paying a significant cost once they have met their deductible, and before they reach a catastrophic level where the cost is mostly paid by medicare. host: i want to ask you about rebates and other price concessions. you have a chart that looks at two drugs -- and nora, it, and elation. both of those showed this dotted area there of the estimated rebates, u.s. rebates and price concessions. that mean that if those price concessions were not there, that drug would be costing that much in the united states? guest: that's right. higher price is really what the growth price is, but that would

be paid by both individuals and all payers, but that is offset, for many brain drugs, significantly offset, back from the manufacture of health plans and others, and in both examples that has reduced the per month price hundreds or thousands of dollars. we have seen in the past and medicare on average for brand drugs, rebates may be offsetting about 20% of what the cost would otherwise be. the issue is that may help reduce the costs. may hold their premiums for lower. but it doesn't necessarily reduce the costs for individuals , paying the higher priced based on the growth price. host: what is the number one reason? we look across australia,

france, and what is the number one reason those costs are lower? guest: i wish i could give a single reason. it is a combination of the regulation, the competition, and they are able to have formularies that prefer drugs where they have reached negotiations and believe there is comparative effectiveness, whereas in the u.s., that is something that is done not at this level individually, allowing more choice and individuals to choose their health plans or different, even if they are more expensive drugs. host: typically, how long does it take you to put together a study like this? guest: we have reports that take weeks or months, others that take years. this was a fairly extensive study. the complexity of the issues, that we had not -- we started with a much larger group of countries, and then frankly, in the u.s., prices in the u.s. --

the study was longer than the other study. the actual dates of the report, i think it was roughly over more than a year, possibly two years. that is a much longer study, given the amount of data that we get from other countries. and from the u.s. to make sure we can make these apple to apple comparisons. host: back to calls. bought in yuma, arizona. caller: good morning. i live on a border town. in mexico you can get your drugs , at least 50% less than in the united states. even the canadians when they come down here, they buy their drugs and take them back to canada with them. does that make any sense to you?

thank you. host: ok, bob. guest: i certainly have heard similar stories. the experiences at the mexico border, the canadian border, able to go and see that the drugs are much lower. that may not make sense from a logical perspective, the exact same drugs that in your case may be a few miles away in the country, costing different amounts. i think it is challenging. there are proposals that would either -- that would allow more importation of drugs for other countries. but other considerations, on the small scale that that is done now, i know for example in canada, there were studies that indicated that a larger importation of drugs in the u.s., the u.s. drug market is much bigger. that may have consequences that manufacturers may raise the

prices that they have in other countries. it gets complicated, but your experience is one that we hear that many people across the border on individual level. host: here is damien in georgia. caller: yes, mr. dicken, how are you doing this morning? guest: good. caller: i have a question and i want to see if you will answer it. first of all, they don't care what we do here, hurting people with our drug prices or whatever. we have a way of ensuring the welfare whites and jews of this country. with that being said, answer this question. aoc did a thing on capitol hill about how we do and pay for the american public -- the american public pays for the research, and whether drug comes out, we

find it has been tested and it's ok, we give it to a family, and then that family controls -- or a company, whatever you want to call it -- and that family comes out and controls what happens to the drug instead of giving it to the public. you bring up australia a lot. that same drug was sent to australia for 8000 and month when we were paying 200 and month for over here. why is america the land of greed and out of controlness that we have in this country? host: if you would like to respond to the caller, that is fine. guest: thank you. you know, i think there are a range of thoughts. certainly, in the u.s., the fda is responsible for the safety and efficacy of drugs. that's a big challenge, but that is their primary mission,

proving drugs are available on the market -- approving drugs available on the market. there is some collaboration between fda and other countries to make sure that given drugs are a global market, that the drugs are available and safe and effective. certainly the drug prices reflect that the u.s. has paid a significant amount for research and development, and having the choice of drugs leads to where we are, which is our drug prices are significantly higher, two to four times higher and in other countries. host: in the report can be read at gao.gov. john dicken is--john dickenhe

president trump. >> this is just the beginning. hi, and welcome to axios event. welcome to audience on facebook, twitter, linkedin and axios.com. over the next 30 minutes i'll be joined by my colleague, co-founder mike allen as we explore the facebook decision over president donald trump's suspension. joining us vice-president of the cato institute, welcome, john. >> thanks for having me,