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Drug Prices in US Substantially Higher Than in Other Nations

Brand-name drug prices in the US are 4.22 times higher, on average, than those in 33 other nations, while prescriptions drug prices overall are 2.78 times higher, on average.

A new RAND report sponsored by the Office of the Assistant Secretary for Planning and Evaluation in the US Department of Health and Human Services compared industry standard IQVIA MIDAS data on drug sales and volume for 2022 for the US and 33 Organisation for Economic Co-operation and Development (OECD) nations. The data include most prescription drugs sold in the US and comparison countries. A similar report was completed for 2018.

Total drug spending in 2022 was $989 billion across all of the OECD nations studied. The US accounted for 62% of sales, but 24% of the volume.

“These findings provide further evidence that manufacturers’ gross prices for prescription drugs are higher in the US than in comparison countries,” said Andrew Mulcahy, lead author of the study and a senior health economist at RAND, a nonprofit research organization. “We find that the gap is widening for name-brand drugs, while US prices for generic drugs are now proportionally lower than our earlier analysis found.”

Unbranded prescription drugs account for 90% of prescription drug volume in the US. Their costs are about 67% of the average cost in comparison nations, the report finds.

The analysis used manufacturer gross prices for drugs. Net prices, which represent the amounts ultimately retained by manufacturers after negotiated rebates and other discounts are applied, are not systematically available. After adjusting prices downward to account for these discounts, US prices for brand name drugs remained more than three times higher than those in other countries.

Researchers note that some sensitivity analyses lowered the differences between US prices compared to those in other nations, under all the scenarios examined overall prescription drug prices remained substantially higher in the US.

In the US, prescription drug spending accounts for more than 10% of all health care spending. Retail prescription drug spending in the US increased by 91% between 2000 and 2020 and is expected to increase by 5% annually through 2030.

 

 

DRug Costs