By using external reference pricing to match U.S. drug prices to those in Japan, the U.K. or Canada,  Medicare could have saved nearly $73 billion in 2018, according to a new study published in Health Affairs.

Five things to know:

1. For the study, researchers analyzed 79 medicines that Medicare Part D spent the most on that did not have competition from lower-cost generic alternatives. All of the drugs analyzed had been on the market for at least three years.

2. For 79 brand-name prescription drugs, the U.S. price was 3.2 percent to 4.1 percent higher on average than in the other three countries.

3. If Medicare Part D adopted the average price from the other three countries, the government program could have saved $72.9 billion on sole-sourced drugs in 2018.

4. The Trump administration has proposed using an international pricing index to set prices for Medicare Part B, which covers drugs administered in a healthcare setting. The study shows the method could also reap significant savings for Medicare Part D. According to researchers, 29 other countries use reference pricing to set and negotiate drug prices.

5. “Medicare could use external reference pricing in Part D to improve affordability for patients,” the study authors concluded.

Access the full study here.

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