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Why do drugs cost so much more in the United States?

drugsBefore 1990, prescription medications in the U.S. cost about the same as they did in other countries. Then prices tripled between 1997 and 2007, according to a new study by Health Affairs.

After a brief slowdown, costs shot up again after 2013. Why the spike?

In 2015 Americans spent an average of $1,000 a person each year on prescription drugs, the highest among nine other wealthy nations, according to The Commonwealth Fund. The closest is Switzerland, which spends $783.

In a recent article, The New York Times tried to explain what goes into this high spending. First, it eliminated possibilities:

  • Americans don’t typically take more drugs than patients in other countries. In fact, Americans take prescription drugs 12 percent fewer days per year than their counterparts in other wealthy countries.
  • Patients in the U.S. also try to buy cheaper alternatives, using a greater proportion of generic drugs than most other countries.

However, when Americans buy brand-name drugs, they cost twice as much as those found in Canada because the U.S. lacks widespread policies to limit drug prices that many other countries have.


After reviewing the research, The Times pointed to several reasons for high drug spending in the U.S:

  • Few price controls and rapid growth of brand-name drugs.
  • More advertising to physicians and consumers.
  • Relaxed regulations on TV drug ads.
  • More rapid FDA approvals, fueled by new fees collected from pharmaceutical manufacturers, pushed more drugs to market.
  • Expanded coverage of drugs through public programs.

The Trump administration made a proposal to lower drug prices by matching them to the costs in other countries. The online pharmacy CVS also recently said it will create employer drug plans to include drugs according to their cost-effectiveness, similar to what happens in other countries.

How have you or a family member been affected by rising Rx prices? Share your story with Voices for Affordable Health.