U.S. Drug Prices Much Higher Than in Other Nations

January 29, 2021 – Prescription drug prices in the United States are more than 250% times higher overall than in 32 other countries, according to a new report from the RAND Corporation.

The price differential was even greater for brand name drugs, with US prices 3.44 times higher than those in other countries. Meanwhile, generic drug prices are slightly lower in the United States than in most other countries. Unbranded generic drugs account for 84% of drugs sold in the United States by volume, according to the researchers, but only 12% of US spending.

“The vast majority of prescription drugs [in the U.S.] are for generics, and the United States is doing pretty well there, ”says Andrew Mulcahy, PhD, senior policy researcher at RAND and lead author of the report. “But for brand name drugs, we pay a lot more.”

RAND is a non-profit research organization. The research was sponsored by the US Department of Health and Human Services.

The aim of the research, says Mulcahy, was “to understand in a very broad way how prices stacked up between these countries.”

In a statement, PhRMA, an industry group, says the US system relies on a competitive market to control costs, and that system works.

Report Details

RAND researchers used the most recent data available from 2018 to estimate how much higher drug prices in the United States are compared to other countries in the Organization for Economic Co-operation and Development. (OECD). The researchers arrived at estimates by looking at industry standard data on drug sales and volume for 2018 and compared the United States to 32 other countries that are also members of the OECD. They captured most of the prescription drugs in the United States and other countries.

The team used manufacturers’ prices for the drugs, Mulcahy says, rather than net prices, the fees ultimately paid after rebates and other discounts, because net prices are not available everywhere.

Ultimately, says Mulcahy, “On average, US prices are higher, regardless of which method you use; not a little bit, but not bad. “

But on the generic side, he says, “I think something’s going on here. The United States has higher generic prescription drug use, compared to other countries, and lower prices.

Drug price trends: overview

Among G7 countries, the lowest prescription prices were found in the UK, France and Italy, the researchers found, while Canada, Germany and Japan generally have higher prices. , but still much lower than in the United States.

The latest studies comparing drug prices in the United States with those in other countries are almost 10 years old, Mulcahy says, making this research necessary.

The researchers estimated that in all of the countries assessed, total drug spending was $ 795 billion. The United States accounted for 58% of sales but only 24% of volume.

Watch the sub-assemblies

While the researchers did not look at the drugs individually, they did look at certain groups of drugs, such as biologics. “Many of the more expensive drugs are the biologics that we often see advertised on television,” Mulcahy says.

Biologics are drugs made from living organisms or parts of living organisms. Examples are infliximab (Remicade) for arthritis and trastuzumab (Herceptin) for cancer.

One way to reduce these costs is to use biosimilar drugs. As of December, the FDA had approved 29 biosimilars. Manufacturers of biosimilars must show that their drugs do not present any clinically meaningful difference between themselves and the original drug.

Pharma responds

The report acknowledges that sometimes Americans pay more for drugs, according to Nicole Longo, spokesperson for PhRMA, “but when we do it, it’s for innovative and life-saving drugs, not for generic drugs that are safe. the market for some time. This helps ensure that Americans have access to the latest medical advances.

“There are instances where we need to address the price disparities between the United States and other countries, and trade agreements and their enforcement are one way to resolve these issues,” she said. “Policymakers should also pursue common sense reforms to fix our system, which will reduce out-of-pocket spending for patients.”

Some of the remedies suggested by the PhRMA include annual caps on personal expenses, lower cost-sharing costs, and ways to allow patients to spread costs throughout the year.

WebMD Health News


RAND: “International Prescription Drug Price Comparisons: Current Empirical Estimates and Comparison with Previous Studies,” January 28, 2021.

Andrew Mulcahy, PhD, Senior Policy Researcher, RAND Corporation.

Nicole Longo, spokesperson, PhRMA, Washington, DC.

FDA: “Biosimilar Information”.

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