New Data Show US Drug Prices Are 2.56 Times Those in Other Nations

Recent research has found that prescription drug prices in the United States are significantly higher than those in other nations, with prices averaging 2.56 times those seen in 32 other countries. This gap is even larger for brand-name drugs, according to the RAND Corporation report.

In contrast, the report found that prices for unbranded generic drugs are slightly lower in the United States than in most other nations. Unbranded generic medications account for 84% of drugs sold in the United States by volume but just 12% of spending, according to a press release. Conversely, brand-name drugs are an average 3.44 times higher in the United States than in comparator nations.

“Brand-name drugs are the primary driver of the higher prescription drug prices in the US” said Andrew Mulcahy, PhD, lead author of the study and a senior health policy researcher at RAND, in a press release. “We found consistently high US brand name prices regardless of our methodological decisions.”

The analysis is based on 2018 data and provides the most up-to-date estimates of drug prices in the United States compared to prices in other countries in the Organization for Economic Cooperation and Development (OECD). The investigators calculated price indexes under a wide range of methodological decisions. Although some sensitivity analyses lowered the differences between US prices compared to those in other nations, under all scenarios overall prescription drug prices remained substantially higher in the United States.

The researchers used manufacturer prices for the analysis because net prices are not systemically available, according to the press release. Even after adjusting US prices downward based on an approximation of the price after negotiated rebates and other discounts are applied, the investigators found that US prices remained substantially higher than those in other countries.

The only consistent area in which prices were lower in the United States was generic drugs, where prices were 84% of the average paid in other countries. Among G7 nations, the study authors found that the United Kingdom, France, and Italy generally have the lowest prescription drug prices, while Canada, Germany, and Japan tend to have higher prices.

The team also examined several subsets of prescription drugs, including brand-name originator drugs, unbranded generic drugs, biologics, and nonbiologic drugs. They found that some of the highest-priced drugs in the United States are brand-name drugs that can cost thousands of dollars per treatment and treat life-threatening illnesses such as hepatitis C or cancers.

“Many of the most-expensive medications are the biologic treatments that we often see advertised on television,” Mulcahy said in the press release. “The hope is that competition from biosimilars will drive down prices and spending for biologics. But biosimilars are available for only a handful of biologics in the United States.”

The investigators estimated that across all of the OECD nations studied, total drug spending was $795 billion. The United States accounted for 58% of sales, but just 24% of the volume. In the United States, estimates suggest that prescription drug spending accounts for more than 10% of all health care spending. Drug spending jumped by 76% between 2000 and 2017, and the costs are expected to increase faster than other areas of health care spending over the next decade as new, expensive specialty drugs are approved, according to the study authors.

REFERENCE

Prescription Drug Prices in the United States Are 2.56 Times Those in Other Countries [news release]. RAND Corporation; January 28, 2021. https://www.rand.org/news/press/2021/01/28.html. Accessed January 29, 2021.