Higher US Branded Drug Prices And Spending Compared To Other Countries May Stem Partly From Quick Uptake Of New Drugs

Abstract

The United States spends considerably more per capita on prescription drugs than other countries in the Organization for Economic Cooperation and Development (OECD). Drawing on the Intercontinental Medical Statistics Midas database, we examined the variation in drug prices among selected OECD countries in 2005, 2007, and 2010 to determine which country paid the highest prices for brand-name drugs, what factors led to variation in per capita drug spending, and what factors contributed to the rate of increase in drug spending. We found that depending on how prices were weighted for volume across the countries, brand-name prescription drug prices were 5-198 percent higher in the United States than in the other countries in all three study years. (A limitation is that many negotiated price discounts obtained in the United States may not be fully reflected in the results of this study.) A contributor to higher US per capita drug spending is faster uptake of new and more expensive prescription drugs in the United States relative to other countries. In contrast, the other OECD countries employed mechanisms such as health technology assessment and restrictions on patients' eligibility for new prescription drugs, and they required strict evidence of the value of new drugs. Similarly, US health care decision makers could consider requiring pharmaceutical manufacturers to provide more evidence about the value of new drugs in relation to the cost and negotiating prices accordingly.