The U.S. spent about 150% more on prescription drugs in 2018 compared with dozens of other countries, according to a new RAND Corporation analysis.
On average, prescription drug prices were 2.56 times higher in the U.S. than in 32 other Organization for Economic Cooperation and Development (OECD) member nations, reported RAND’s Andrew Mulcahy, PhD, MPP, and colleagues.
When focusing solely on G7 nations, U.S. prices ranged from about twice as high as those in Japan, to about 2.6 times those in France. Not surprisingly, the gap was even wider for brand-name drugs, with the U.S. paying an average of 3.44 times more for these than the 32 other nations.
“Brand-name drugs are the primary driver of the higher prescription drug prices in the U.S.,” Mulcahy said in a statement.
Unbranded generics, on the other hand, actually cost slightly less in the U.S., which paid, on average, 84% of the price in other nations. They were also prescribed more frequently in the U.S., where they accounted for about 84% of drugs sold by volume compared with about 35% of prescription drug volume for other OECD countries.
Still, generics only accounted for about 12% of U.S. spending on pharmaceuticals overall. Brands accounted for 11% of U.S. prescription volume and 82% of prescription spending.
“Overall, the United States’ considerable unbranded generic market share and low average unbranded generic prices did not fully offset higher brand-name originator prices,” the authors wrote.
“For the generic drugs that make up a large majority of the prescriptions written in the U.S., our costs are lower,” Mulcahy said in a statement. “It’s just for the brand name drugs that we pay through the nose.”
The researchers noted that they used manufacturer prices in their calculations because net prices — the prices ultimately paid for drugs after rebates and other discounts are applied — aren’t systematically available.
Still, they attempted a sensitivity analysis that adjusted U.S. prices downward based on published estimates of relative differences between manufacturer and net prices. That analysis found that U.S. prices remained substantially higher — about 1.9-fold higher — than prices in other countries. They also noted that they couldn’t adjust for rebates and discounts in other countries.
“Although different methodological decisions did change the magnitude of results, the overall pattern of higher drug prices in the U.S. was generally consistent,” they wrote.
Overall, total drug spending across all nations was $795 billion. Among G7 nations, the U.K., France, and Italy had the lowest prescription drug prices, while Canada, Germany, and Japan had higher prices, alongside the U.S., according to the report.
“Many of the most-expensive medications are the biologic treatments that we often see advertised on television,” Mulcahy said in the statement. “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.”
The report was based on 2018 drug sales and volume data from the MIDAS dataset at IQVIA.