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Why Prescription Drug Prices in the US Are So High



Photographer: Bill Oxford/iStockphoto/Getty Images


Americans spend more on prescription drugs -- average costs are about $1,300 per person per year -- than anyone else in the world. It’s true that they take a lot of pills. But what really sets the US apart from most other countries is high prices. The median launch price of a new drug in the US in 2021 was $180,000 for a year’s supply. While drugmakers aren’t hiking prices of existing products quite as aggressively as they did prior to 2019, they still continue to steadily raise list prices around 5% a year, according to 46brooklyn Research, a nonprofit drug pricing research firm. While private insurers and government programs pick up the biggest share of the bill, high drug costs are ultimately passed on to members of the public through the premiums they pay to keep their insurance policies active and the taxes they pay to the government. 

The US Congress is weighing a proposal, backed by President Joe Biden, aimed at lowering prices. It would require the government’s Medicare health program for the elderly to negotiate the prices of certain big-ticket medicines with the manufacturers that produce them. The companies have fiercely opposed the policy. Outrage at drugmakers has been building in the US. The backlash first erupted in 2013 when Gilead Sciences released the groundbreaking hepatitis cure Sovaldi at $84,000 for a 12-week course. The steep price and stampede of patients to get the drug led many insurers to restrict coverage to the sickest patients. A probe by a Congressional committee concluded at the end of 2021 that drug companies had raised prices “with abandon,” using anticompetitive strategies and manipulating the patent system and marketing exclusivities granted by regulators to do so.