Paying for Prescription Drugs Around the World: Why Is the U.S. an Outlier?

Abstract

Issue: Compared with other high-income countries, the United States spends the most per capita on prescription drugs.

Goal: To compare drug spending levels and trends in the U.S. and nine other high-income countries — Australia, Canada, France, Germany, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom; consider potential explanations for higher U.S. spending; and explore patients’ exposure to pharmaceutical costs.

Method: Analysis of health data from the Organisation for Economic Co-operation and Development, the 2016 Commonwealth Fund International Health Policy Survey, and other sources.

Findings and conclusions: Various factors contribute to high per capita drug spending in the U.S. While drug utilization appears to be similar in the U.S. and the nine other countries considered, the prices at which drugs are sold in the U.S. are substantially higher. These price differences appear to at least partly explain current and historical disparities in spending on pharmaceutical drugs. U.S. consumers face particularly high out-of-pocket costs, both because the U.S. has a large uninsured population and because cost-sharing requirements for those with coverage are more burdensome than in other countries. Most Americans support reducing pharmaceutical costs. International experience demonstrates that policies like universal health coverage, insurance benefit design that restricts out-of-pocket spending, and certain price control strategies, like centralized price negotiations, can be effective.