A recent study by the RAND Corporation sheds light on just how much higher these prices are compared to other nations. (CREDIT: Creative Commons)
Prescription drug prices in the United States have long been a topic of concern, and a recent study by the RAND Corporation sheds light on just how much higher these prices are compared to other nations.
The report, which updates earlier findings, reveals that drug prices in the U.S. average 2.78 times higher than those in 33 other nations within the Organization for Economic Co-operation and Development (OECD).
The disparity in prices becomes even more pronounced when focusing on brand-named drugs. According to the RAND study, brand-named drug prices in the U.S. are a staggering 4.22 times higher than those in comparison countries.
However, the situation is somewhat different when it comes to unbranded generic drugs, which constitute a significant portion of prescription volume in the U.S. These generic drugs are priced at about 67% of the average cost in the comparison nations.
The lead author of the study, Andrew Mulcahy, who is a senior health economist at RAND, emphasizes the significance of these findings. He states, "These findings provide further evidence that manufacturers' gross prices for prescription drugs are higher in the U.S. than in comparison countries. We find that the gap is widening for name-brand drugs, while U.S. prices for generic drugs are now proportionally lower than our earlier analysis found."
One of the noteworthy aspects of this report is its use of updated information through 2022, providing the most current estimates of the drug price differential between the U.S. and other OECD countries. In addition, the study delves into price comparisons for biosimilars and tracks changes in price comparisons over time.
To conduct their analysis, researchers at RAND examined industry-standard IQVIA MIDAS data on drug sales and volume for 2022, comparing the U.S. to 33 OECD nations. The data encompassed a wide range of prescription drugs sold in both the U.S. and comparison countries.
U.S. Manufacturer Gross Prescription Drug Prices as a Percentage of Prices in Selected Other Countries, All Drugs, 2022. (CREDIT: ASPE)
Interestingly, while the report acknowledges variations in methodological decisions, all scenarios examined concluded that overall prescription drug prices remained substantially higher in the U.S. than in the comparison countries. Even when accounting for negotiated rebates and other discounts that lower net prices, U.S. prices for brand-name drugs still exceeded those in other countries by over three times.
The disparities in drug prices extended across all 33 comparison countries, ranging from 1.72 times higher in Mexico to a staggering 10.28 times higher in Turkey. These statistics illustrate the magnitude of the issue and the variation in drug pricing policies among different nations.
General Drug Price Relationships for Brand-Name Drugs and Commercial PBMs or Payers. (CREDIT: ASPE)
Another critical point highlighted by the RAND study is the significant role the United States plays in global drug spending. In 2022, the U.S. accounted for a remarkable 62% of total drug sales among the OECD nations studied, despite representing only 24% of the total volume. This data underscores the outsized impact of U.S. drug pricing on the global pharmaceutical market.
The escalating cost of prescription drugs is a growing concern in the United States, where recent estimates show that prescription drug spending accounts for over 10% of all healthcare spending. Over the past two decades, retail prescription drug spending in the U.S. has surged by 91%, and it is projected to continue rising by 5% annually through 2030.
U.S. Brand-Name Originator Drug Prices as a Percentage of Other Countries’ Prices, 2022. SOURCE: Authors’ analysis of 2022 sales and volume data from IQVIA, undated (run date May 19, 2023). NOTE: All Countries refers to all 33 OECD comparison countries combined. Other countries’ prices are set to 100. Only some presentations sold in each country contribute to bilateral comparisons. (CREDIT: ASPE)
The RAND report serves as a crucial update to the ongoing debate surrounding drug pricing in the United States. It highlights the persistent disparity in prices between the U.S. and other nations and emphasizes the need for further examination and potential policy changes to address the issue. The implications of these findings are far-reaching and warrant continued attention and discussion.
The study was sponsored by the Office of the Assistant Secretary for Planning and Evaluation in the U.S. Department of Health and Human Services.
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