U.S. Drug Prices Are 278% Higher Than Other Developed Countries, Says RAND Study

It is not news that prices paid for prescription drug are higher in the U.S. than prices paid in other developed countries. But a RAND analysis published today shows that difference is growing and remains substantial even when the comparison is with U.S. net prices — prices calculated once rebates by manufacturers are factored into the price.

Unbranded generics are an exception to the higher U.S. drugs prices, according to the RAND researchers. Their analysis found that U.S. prices for unbranded generics were 67% of price in the 33 comparison countries when their prices computed into a single price for the purposes of this RAND analysis..

Drug prices in the U.S. are complicated partly because list prices don’t include the rebates manufacturers pay to pharmacy benefit managers and health plans. Leaning on past research, the RAND analysis applied an 37.7% reduction to reflect rebates and arrive a net price for U.S. drugs. But even with that reduction, U.S. net prices were 173% of prices in the comparison group countries and 143% of those in Canada. However, at 107%, U.S. net prices approached those price paid in Mexico. The researchers noted, though, their net price calculations did not include rebates paid in other countries, which, had they been included, would have likely widened the relative difference net U.S. prices and prices elsewhere.

Without factoring rebates, U.S. drug prices were 278% of prices in other countries, according the RAND analysis. Put another way, prices in the comparison countries are about one-third, or 36%, of those in the U.S. When RAND researchers conducted a similar study of prices in 2018, they found that the U.S. drug prices were 256% (so a slightly smaller difference) compared to other developed countries

For the study of 2022 prices, the RAND researchers used a comparison group that included most of the countries in Europe, Turkey, Australia, New Zealand, Japan, South Korea, Mexico, Chile and Colombia. The researchers used IQVIA Midas sales and volume figures to conduct their analysis.

They also broke out prices in seven countries for head-to-head comparisons with U.S. Here are those countries and the proportion of drug prices to U.S. drug prices

• Canada: 44% of U.S. prices
• France: 31% of U.S. prices
• Germany: 34% of U.S. prices
• Italy: 39% of U.S. prices
• Japan: 29% of U.S. prices
• Mexico: 58% of U.S. prices
• United Kingdom: 37% of U.S. prices

When the RAND researchers restricted their analysis to the brand-name originator prices, the differences were even large:

• Canada: 31% of U.S. prices
• France: 22% of U.S. prices
• Germany: 26% of U.S. prices
• Italy: 28% of U.S. prices
• Japan: 22% of U.S. prices
• Mexico: 25% of U.S. prices
• United Kingdom: 26% of U.S.

The script flips with unbranded generics; U.S. prices are lower in than in the seven countries with which the RAND researchers made direct comparisons

• Canada: 256% of U.S. prices
• France: 188% of U.S prices
• Germany: 179% of U.S. prices
• Italy: 217% of U.S. prices
• Japan: 204% of U.S. prices
• Mexico: 196% of U.S. prices
• United Kingdom: 212% of U.S. prices