Research Findings: U.S. Pays Over 2x for Medications Than Other Nations

There’s a fairly simple explanation for why Americans pay more for ALL medications – prescription, and non-prescription (Over The Counter):

Greed.

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News Release:
Prescription Drug Prices in the United States Are 2.56 Times Those in Other Countries
https://www.rand.org/news/press/2021/01/28.html
Thursday, January 28, 2021

Prescription drug prices in the United States are significantly higher than in other nations, with prices in the United States averaging 2.56 times those seen in 32 other nations, according to a new RAND Corporation report.

The gap between prices in the United States and other countries is even larger for brand-named drugs, with U.S. prices averaging 3.44 times those in comparison nations.

The RAND study found that prices for unbranded generic drugs—which account for 84% of drugs sold in the United States by volume but only 12% of U.S. spending—are slightly lower in the United States than in most other nations.

“Brand-name drugs are the primary driver of the higher prescription drug prices in the United States,” said Andrew Mulcahy, lead author of the study and a senior health policy researcher at RAND, a nonprofit, nonpartisan research organization. “We found consistently high U.S. brand name prices regardless of our methodological decisions.”

The RAND analysis is based on 2018 data and provides the most up-to-date estimates of how much higher drug prices are in the United States as compared to other countries in the Organisation for Economic Co-operation and Development.

Researchers calculated price indexes under a wide range of methodological decisions. While some sensitivity analyses lowered the differences between U.S. prices compared to those in other nations, under all the scenarios overall prescription drug prices remained substantially higher in the United States.

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U.S. Prescription Drug Prices Are More Than Double Those in Other Countries

Prescription drug prices in the United States are, on average, 2.56 times higher than the prices in 32 other countries. That’s according to a new RAND report.

Brand-name drugs are the primary driver of America’s higher prescription drug prices: For branded drugs, U.S. prices averaged 3.44 times higher than those in other nations. Prices for generic drugs, on the other hand, are slightly lower in the United States than in most other countries.

Transparency about prices may help address the problem of rising U.S. prescription drug spending, which is estimated to account for more than 10 percent of the country’s total health care spending.

International Prescription Drug Price Comparisons
Current Empirical Estimates and Comparisons with Previous Studies

https://www.rand.org/pubs/research_reports/RR2956.html

The United States spends more on prescription drugs on a per capita basis than most other countries do. Understanding the extent to which drug prices are higher in the United States than in other countries—after accounting for differences in the volume and mix of drugs—is useful when developing and targeting policies to address both growth in drug spending and the financial impact of prescription drugs on consumers. Although several prior studies systematically compare drug prices in the United States with those in other countries, the most recent of these studies used data that are almost a decade old. This report summarizes findings related to international prescription drug price comparisons presented in prior studies and presents new price comparisons that are based on 2018 data—both overall results and narrower analyses on specific categories of drugs, such as brand-name originator drugs, unbranded generic drugs, biologics, and nonbiologic drugs. The report also presents results from sensitivity analyses using different methodological steps and assumptions, such as prices and volume aggregated at different levels and volume weights calculated in different ways. The findings indicate that 2018 drug prices in the United States were substantially higher than those in each of 32 comparison countries when considering all drugs together. Compared with all comparison countries combined, U.S. prices were 256 percent of those in other countries. Prices remained substantially higher than prices in other countries—but with a smaller difference than in our main results—when we adjusted U.S. prices downward based on published estimates of the relative differences between manufacturer and net prices for drugs. U.S. prices for most subsets of drugs, and particularly brand-name originator drugs, were higher than those in comparison countries. The one exception was unbranded generic drugs, for which U.S. prices were on average 84 percent of those in other countries.

Key Findings
Policy discussion surrounding U.S. prescription drug prices focuses on whether prices in the United States are too high or appropriate relative to the benefits that they offer to patients

• Systematic comparisons of drug prices among countries are based on data from a broad set of drugs, and, unlike comparisons of drug spending among countries, they focus narrowly on differences in prices absent the influences of different volumes and mixes of drugs.

• Price indexes are an effective way to focus on prices alone without the risk of interference from other variables—in this case, differences in drug volume share or mix.

• Calculations in this report are based on 2018 data comparing prescription drug prices in the United States with those in 32 comparison countries.

• Along with overall price comparisons, researchers focused on subsets of brand-name originator drugs, unbranded generic drugs, biologics, and nonbiologic drugs.

Prices in the United States are higher than those in all comparison countries

• U.S. prices were 256 percent of those in the 32 comparison countries combined.

• In comparisons with individual countries, U.S. prices ranged from 170 percent of prices in Mexico to 779 percent of prices in Turkey.

• The gap between U.S. prices and prices in other countries was larger for brand-name originator drugs.

• U.S. prices were 84 percent of prices in all non-U.S. countries for unbranded generics.

• U.S. prices were 190 percent of prices in other countries after adjusting U.S. prices downward to account for rebates and other discounts.