Americans Pay Far More for Drugs Than Other Countries

by Admin | May 7, 2021 6:06 pm

May 7, 2021– Americans are charged at least two to four times more for 20 major brand-name drugs, according to a new report to Congress. The Government Accountability Office (GAO) looked at the retail prices charged for brand-name, single-source drugs in the U.S. and compared them with those charged in Australia, Canada, and France.

The researchers were able to adjust U.S. prices to account for discounts and rebates but not for the other countries, so the gap is likely to be higher. When they compared net prices in the U.S. to the prices charged in the three other countries, they still found most of the American prices to be higher. Just four of the 41 drugs studied had lower net prices in the U.S.

The report was prepared at the request of Sen. Bernie Sanders (I-Vt.), the chairman of the Senate Budget Committee, but it did not make any policy recommendations. Sanders is pressing Congress to take up legislation to rein in drug prices in the U.S. “The time is long overdue for the United States to do what every major country on earth does: negotiate with the pharmaceutical companies to lower the outrageous price of prescription drugs,” he said in a statement[1].

President Biden did not include drug pricing proposals in his recently introduced American Jobs Plan, but did highlight the issue in his address[2] to a joint session of Congress on April 28, saying: “Let’s give Medicare the power to save hundreds of billions of dollars by negotiating lower drug prescription prices. … And the money we save, which is billions of dollars, can go to strengthen the Affordable Care Act and expand Medicare coverage benefits without costing taxpayers an additional penny.” Democratic leaders in the House and Senate have said they will try to include such legislation in the jobs bill.

The GAO found the U.S. spends more on prescription drugs both as a share of its economy and per person than most other developed countries. In 2018, U.S. spending on prescription drugs was 1.95% of GDP and approximately $1,229 per person.

The report highlights the price differences among the four countries for several drugs, including:

The report notes that prescription drug coverage varies by country. While some countries have universal prescription drug coverage that relies on centralized price negotiation with manufacturers, the U.S. primarily has a decentralized system, resulting in multiple prices among different payers for each drug. The U.S. does have policies to rein in drug costs for Medicaid and the Department of Veterans Affairs as well as the 340B drug pricing program. Private insurers often use pharmaceutical benefit managers (PBMs) to negotiate better prices in return for including a manufacturer’s drugs on their formularies. 

It’s not clear where the debate over drug prices will go, but momentum appears to be building for a serious discussion of the issue this year and possibly votes on legislation.

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Endnotes:
  1. statement: https://www.sanders.senate.gov/press-releases/news-new-gao-study-finds-u-s-pays-two-to-four-times-more-for-prescription-drugs-than-other-nations/
  2. address: https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/04/29/remarks-by-president-biden-in-address-to-a-joint-session-of-congress/
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