Posted At Fool.com

BY : Brian Gorman

We like our pharmaceuticals here in America.

The fact that the U.S. is the largest consumer of prescription drugs is probably reflective of our culture of immediate gratification. We American consumers like our convenience, and medicines play to this preference by promising speedy, easy-to-consume remedies to different ailments. By virtue of living in the wealthiest country in the world, American citizens (the ones with health insurance, anyway) expect low-cost access to all the latest the drug industry has to offer. With the rising cost of drugs, though, it may not be possible to fulfill this expectation indefinitely.

Not every country follows the American model. A dramatic counterexample is the U.K., which has taken a decidedly more parsimonious approach to providing coverage for certain drugs. The Wall Street Journal recently detailed the British government health-care system's decision to order doctors to stop prescribing some Alzheimer's drugs based on an analysis that suggested that the medicines simply didn't provide enough benefit for the cost.

Not surprisingly, the ruling led to protest from pharmaceutical companies, including Pfizer (NYSE: PFE) and Eisai Co., which market the Alzheimer's drug Aricept. Other companies impacted include Novartis (NYSE: NVS) and Shire Pharmaceuticals (Nasdaq: SHPGY).

The big question on the minds of drug investors should be whether this sort of restriction could arise in the U.S. It hardly seems possible given the current stance on drug coverage in the U.S., but in the long run, it isn't out of the question.

Keep in mind that the U.S. government is getting involved with prescription drug coverage via the new Medicare drug benefit. At present, the government is struggling with a yawning budget deficit, and if this persists, restricting access to pricey drugs that don't provide major benefits may be an option legislators could be forced to take.

Of course, medications that clearly improve quality of life aren't in any danger, but certain categories may be vulnerable. Physicians at a conference at John Hopkins last year questioned the utility of many Alzheimer's drugs, and recent research by the National Institute of Mental Health found that many new medicines for schizophrenia are no better than generic options. As evidence piles up on efficacy piles up, cost-benefit analysis may play a bigger role in drug coverage.