RAND study: US prescription drug prices significantly higher than in other countries
Prescription drug prices in the United States are an average of 2.56 times higher than those seen in 32 other nations, according to a RAND Corporation report.
The price gap was even bigger for brand name drugs — 3.44 times higher — researchers said. However, generic drug prices in the U.S. were 84% of the average paid in other nations.
“For the generic drugs that make up a large majority of the prescriptions written in the U.S., our costs are lower,” Andrew Mulcahy, PhD, a senior health policy researcher at RAND Corporation, said in the release. “It’s just for the brand-name drugs that we pay through the nose.”
The researchers based their analysis on 2018 data from countries in the Organisation for Economic Cooperation and Development. They focused on manufacturer prices, not prices consumers ultimately paid for drugs. However, even after adjusting U.S. prices downward based on an approximation of negotiated rebates and other discounts, prices stayed “substantially higher” than those in other countries, according to a press release.
The total drug spending across all nations was $795 billion, and of that total, the U.S. accounted for 58% of sales and 24% of the volume.
Among the G7 nations, the United Kingdom, France and Italy generally had the lowest prescription drug prices, whereas Canada, Germany and Japan tended to have higher prices.
“Many of the most-expensive medications are the biologic treatments that we often see advertised on television,” Mulcahy said in the 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.”
He told Healio Primary Care that the U.S. government has made several attempts lower the costs of prescription drugs. Specifically, the House passed a bill that would allow the HHS Secretary “to negotiate drug prices directly with manufacturers, subject to a cap based on prices in other countries,” but it was never addressed in the Senate.
In addition, a proposed Senate bill would ban “year‐on‐year price increases beyond inflation,” while “a flurry of executive orders from the prior administration targeted insulins (allowing reimportation and lower prices for fills from federal clinics)” and “rebates paid by drug companies to payers (which have important implications for patient copays but may or may not contribute to higher overall prices for drugs),” Mulcahy said.
“The most ambitious proposal was the Medicare most-favored nation payment model, which sets the Medicare payment rate for many physician‐administered drugs at the lowest price paid across 20 countries,” Mulcahy continued. “That model was supposed to have started January 1 but is on hold due to legal action. It’s not clear how the Biden administration will proceed with the most-favored nation rule.”
The RAND Corporation’s full report is available on its website.