Now I am not one to make things political around these parts, but as the price expert here I found this recent quote from President Joe Biden rather interesting. “If I put you on Air Force One with me, and you have a prescription — no matter what it’s for, minor or major — and I flew you to Toronto or flew to London or flew you to Brazil or flew you anywhere in the world, I can get you that prescription filled for somewhere between 40 to 60 percent less than it costs here,” Biden said Feb. 22 at a campaign reception in California.
As with everything that is said by a high-ranking political figure nowadays, the internet needed to weigh in on the truthfulness of this statement. Most sites listed this statement as “mostly true” which piqued my interest. Mostly true? Which means partially false and hence my deep dive into the complex atmosphere of international prescription drug pricing.
So based on the fact check, this estimate is accurate because prescription medications from brand-name drug companies charge prices two to four times higher than other high-income, industrialized countries. This is offset by generic drugs which cost 33% less than the brand-name drugs for American users. Not only that, these generic drugs make up 90% of filled prescriptions. While the per person cost per year for drugs is about $1,126 in the USA compared to $552 in other wealthy nations, the majority of Americans actually aren’t spending nearly as much as the average.
So why are other nations able to get such lower prices for name-brand drugs? Here are six differences between USA pricing and international pricing:
1. There is no central negotiator willing to walk away
• Other nations have their government negotiating pricing with companies.
• In USA the drug companies have thousands of different health plan companies to negotiate with giving less bargaining power to these buyers
2. There are no price controls
• Many countries, like France, will set a cap to drug prices. The drug companies will agree to these prices as they don’t want to lose business in these countries
• In USA drug companies continue to raise prices as commercial insurance continues to cover
3. The system creates incentives
• Medicare and many insurance companies will reimburse doctors based on a percentage of the cost of a drug. Would you rather get 6% of $100 drug or 6% of $10,000 drug?
4. The system is complicated
• Drug companies actually only make about 50% of the drugs price tag
• Between markups from unchecked intermediaries and insurers causes prices to rise as both profit
5. Patents
• While many other countries offer patents for new discoveries, US companies often game the system to hold monopoly status for long periods of time
• On average, a drug can become manufactured as a generic version 4 years sooner internationally than in the USA
6. The US market is different than the international market
• Simple supply and demand often dictate the price
• US insurance companies are more willing to spend big in the hopes of finding a cure and avoiding even more future spending
https://www.statesman.com/story/news/politics/politifact/2024/03/05/politifact-medication-cost-mostly-true-that-united-states-pays-twice-what-other-countries-pay/72842484007/
https://www.nytimes.com/2024/01/17/health/us-drug-prices.html