Prescription drug prices in the United States are significantly higher than in other countries, with an average price of 2.56 times in the US than in 32 other countries, according to a new report from RAND Corporation.
The gap between prices in the US and other countries is even larger for brand name drugs, with US prices averaging 3.44 times lower than the countries being compared.
The RAND study found that prices for generic drugs without branding – which sell 84% of the drugs in the US, but only 12% of US spending – are slightly lower in the US than in most other countries.
“Branded drugs are the primary factor in the higher prices of prescription drugs in the U.S.,” said Andrew Mulcahy, lead author of the study, and a senior health policy researcher at RAND, a nonprofit, nonpartisan research organization. “We have consistently found high US brand prices, regardless of our methodological decisions.”
The RAND analysis is based on 2018 data and provides the most recent estimates of how much higher drug prices are in the US compared to other countries in the Organization for Economic Co-operation and Development.
Researchers have calculated price indices under a wide range of methodological decisions. Although some sensitivity analyzes have reduced the differences between US prices compared to those of other countries, the prices of prescription drugs in the US have remained much higher
The analysis used producer prices for medicines because net prices, ie the prices that are eventually paid for medicines after negotiated discounts and other discounts are not systematically available. Even after US prices were adjusted downwards based on an approach of this discount to offset these discounts, US prices remained significantly higher than in other countries.
The one consistent area where prices were lower in the US was generic medicines, where prices were 84% of the average paid in other countries.
“For the generic medicine that makes up a large majority of prescriptions in the U.S., our costs are lower,” Mulcahy said. “We only pay through the brand name medicine through the nose.”
The study found that the UK, France and Italy have the lowest prices for prescription drugs among G7 countries, while Canada, Germany and Japan usually have higher prices.
Although several previous studies have compared drug prices in the United States with those of other countries, the most recent studies have been used for almost ten years.
RAND researchers compiled their estimates by examining the IQVIA MIDAS data of the industry standard on the sales and volume of drugs for 2018, and the US compares with 32 countries that belong to the OECD. The data contains most prescription drugs sold in the US and comparison countries.
Researchers say that comparing such comparisons requires a variety of decisions and assumptions to calculate price indices. The US consistently had higher drug prices, regardless of how the researchers calculated price indices and treated the outliers in the data.
The RAND team examined several prescriptions of prescription drugs, including branded drugs, non-branded generic drugs, biologics, and non-biologics.
Some of the most expensive drugs in the United States are brands that can cost thousands of dollars per treatment and can treat life-threatening diseases such as hepatitis C or cancer.
“Many of the most expensive drugs are the biological treatments we regularly see advertised on television,” Mulcahy said. “The hope is that competition from biosimilars will reduce prices and spending on biological agents. But bio-comparisons are available for only a handful of biologics in the United States. ”
Researchers have estimated that total drug spending in all OECD countries studied is $ 795 billion. The US accounted for 58% of sales, but only 24% of revenue.
Recent estimates suggest that more than 10 percent of U.S. health care spending is spent on prescription drugs. Drug spending in the US increased by 76% between 2000 and 2017, and costs are expected to rise faster in the next decade than other healthcare spending, as new, expensive specialty drugs are approved.
The study was sponsored by the Office of the Assistant Secretary for Planning and Evaluation at the U.S. Department of Health and Human Services.
The report, “International Comparisons to Prescription Medicine: Current Empirical Estimates and Comparison with Past Studies,” is available on the U.S. Department of Health and Human Services website and at http: // www.
Other authors of the report are Christopher Whaley, Mahlet Tebeka, Daniel Schwam, Nathaniel Edenfield and Alejandro U. Becerra-Ornelas.
RAND Health Care promotes healthier communities by improving health care systems in the United States and other countries.