Why Prescription Drug Prices in the US Are So High
Not only do Americans spend more than everybody else, the gap keeps widening. But there's a chance that might change.
Americans spend more on prescription drugs than anyone else in the world. It’s true that they take a lot of pills. But what really has set the US apart is how much drugs cost. Unlike in most other countries, their prices have been set without direct government intervention. Now a new law aims to change that for certain drugs for elderly and disabled patients who rely on the government’s Medicare health program. Despite opposition from the pharmaceutical industry and a raft of lawsuits, the government in August announced that the first round of drug price negotiations would save Americans $7.5 billion in its inaugural year.
Prices for drugs in the US in 2022 were nearly three times as high as the average in 33 other countries where incomes are high or relatively high, according to an analysis by the research group Rand Health Care. It’s a gap that has widened in recent years. In 2022, the annual cost of prescription medications was about $1,400 per person. Prescription drug spending in the US was about $634 billion in 2022, according to a study in the American Journal of Health-System Pharmacy, and expected to grow as much as 8% in 2023. That includes drug coverage by insurers and government health programs like Medicare, as well as a significant contribution from out-of-pocket spending by consumers.