US Medicines Cost Nearly Triple Those of Other Nations

It's no secret that healthcare in the U.S. is expensive. But according to new research, U.S. prescription drug prices are, on average, nearly three times more expensive than in other wealthy nations.

In a recently published report by the RAND Corporation, researchers compared the prices of all prescription drugs available in the U.S. to those in 33 other high-income countries from the Organisation for Economic Cooperation and Development (OECD). And the results were striking.

In their analysis based on data from 2022, the team found that, on average, prescription drug prices in the U.S. are 2.78 times higher than they are in other high income countries, with an even starker difference for brand-named pharmaceuticals. When considering branded products alone, drugs in the U.S. were 4.22 times more expensive than those in other countries.

However, there was some respite when it came to non-branded generic drugs, with prices only 67 percent of the average drug cost in other rich nations. These unbranded products account for 90 percent of the volume of drug prescriptions in the U.S. but only 8 percent of the total U.S. spending on prescription drugs. By contrast, branded drugs account for only 7 percent of U.S. prescription drug volume and 87 percent of total spending.

"These findings provide further evidence that manufacturers' gross prices for prescription drugs are higher in the U.S. than in comparison countries," Andrew Mulcahy, lead author of the study and a senior health economist at RAND, a nonprofit research organization, said in a statement. "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."

The team estimates that, across all of the OECD nations, total drug spending was $989 billion in 2022 alone. Sixty-two percent of this was from the U.S., despite accounting for just 24 percent of drug sale volume.

The analysis comes after a similar report from RAND in 2018, which demonstrated consistent results. In fact, the price gap between the U.S. and other countries had slightly widened in the time since the first analysis.

The authors say that understanding these price gaps will be useful in the development and targeting of policies in the future that address both growth in drug spending and the financial impacts of prescription drugs on consumers.

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