Ogura and Hagino.

• Position: Prescription drug plan expenditures - Brief Article

In Japan, prescription drug expenditures account for a huge proportion of total health care costs. Among five major countries, Japan and France each rank at the top in absolute terms for per-patient drug costs, spending more than three times as much as Great Britain, twice as much as the United States, and one and a half times as much as Germany. Ogura and Hagino establish that this is the result of a systematic distortion in drug price controls. The government's attempts to control drug prices have failed, as drug companies have been allowed to substitute old drugs with more expensive new drugs. Ogura and Hagino suggest that by removing distortions that encourage health care providers to select more expensive drugs, drug expenditures in Japan could be reduced by 20 percent or more.

Low levels of household savings in the United States essentially make catastrophic health insurance plans infeasible since most households would find it difficult to pay even...