Drug prices in the U.S. are significantly higher than those in peer countries, according to the latest research from RAND. In fact, compared with 32 other countries combined, drug prices in the U.S. are 256% higher.
The report underscores similar findings over the past several years, but it reveals narrower analyses on specific categories of drugs––brand-name vs. generic drugs, biologics vs. nonbiologic drugs, for example.
During his tenure, President Trump continually railed against drug companies and introduced a handful of policies that could cut drug prices in certain categories. Despite these attempts, drug prices have been rising in the U.S. for years, and several of the big name pharmaceutical companies tend to raise their prices at the start of every year. As 2020 began, more than 250 drugs had higher price tags.
From 2000 to 2017, drug spending in the U.S. rose 76%, and prices are only expected to continue increasing at a faster rate than other healthcare areas, according to RAND.
In its research, RAND looked at 2018 drug prices in 32 comparison countries in the Organization for Economic Co-operation and Development, finding prices in the U.S. ranged from 170% of the prices in Mexico to 779% of those in Turkey. The difference in prices between the U.S. and other countries was larger for brand-name originator drugs, with U.S. prices averaging 3.44 times prices in comparison countries.
“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. “We found consistently high U.S. brand name prices regardless of our methodological decisions.”
Unbranded generics, which account for 84% of drugs sold in the U.S., were actually less expensive, at 84% of the cost in other countries.
“For the generic drugs that make up a large majority of the prescriptions written in the United States, our costs are lower,” Mulcahy said. “It's just for the brand name drugs that we pay through the nose.”
After adjusting for rebates and other discounts, drug prices in the U.S. were 190% north of prices in other countries.
Biologic drugs are among the most expensive, especially brand-name biologics in the U.S. These drugs often treat life-threatening illnesses such as cancer.
“Many of the most expensive medications are the biologic treatments that we often see advertised on television,” Mulcahy said. “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.”
Among the G7 nations, the United Kingdom, France and Italy have the lowest drug prices. Canada, Germany and Japan are on the higher end of pricing. Total drug spending in 2018 across all the comparison countries was $795 billion, with the U.S. accounting for 58% of those sales but only 24% of the volume.
The research was funded by HHS and conducted by RAND Health Care.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."