Download eBook for Free

FormatFile SizeNotes
PDF file 0.9 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.

Research Questions

  1. What are the differences in drug prices between the United States and other countries?
  2. How can these differences be measured, and what sort of methodological decisions are required?

The United States spends more on prescription drugs on a per capita basis than most other countries do. Understanding the extent to which drug prices are higher in the United States than in other countries—after accounting for differences in the volume and mix of drugs—is useful when developing and targeting policies to address both growth in drug spending and the financial impact of prescription drugs on consumers. Although several prior studies systematically compare drug prices in the United States with those in other countries, the most recent of these studies used data that are almost a decade old. This report summarizes findings related to international prescription drug price comparisons presented in prior studies and presents new price comparisons that are based on 2018 data—both overall results and narrower analyses on specific categories of drugs, such as brand-name originator drugs, unbranded generic drugs, biologics, and nonbiologic drugs. The report also presents results from sensitivity analyses using different methodological steps and assumptions, such as prices and volume aggregated at different levels and volume weights calculated in different ways. The findings indicate that 2018 drug prices in the United States were substantially higher than those in each of 32 comparison countries when considering all drugs together. Compared with all comparison countries combined, U.S. prices were 256 percent of those in other countries. Prices remained substantially higher than prices in other countries—but with a smaller difference than in our main results—when we adjusted U.S. prices downward based on published estimates of the relative differences between manufacturer and net prices for drugs. U.S. prices for most subsets of drugs, and particularly brand-name originator drugs, were higher than those in comparison countries. The one exception was unbranded generic drugs, for which U.S. prices were on average 84 percent of those in other countries.

Key Findings

Policy discussion surrounding U.S. prescription drug prices focuses on whether prices in the United States are too high or appropriate relative to the benefits that they offer to patients

  • Systematic comparisons of drug prices among countries are based on data from a broad set of drugs, and, unlike comparisons of drug spending among countries, they focus narrowly on differences in prices absent the influences of different volumes and mixes of drugs.
  • Price indexes are an effective way to focus on prices alone without the risk of interference from other variables—in this case, differences in drug volume share or mix.
  • Calculations in this report are based on 2018 data comparing prescription drug prices in the United States with those in 32 comparison countries.
  • Along with overall price comparisons, researchers focused on subsets of brand-name originator drugs, unbranded generic drugs, biologics, and nonbiologic drugs.

Prices in the United States are higher than those in all comparison countries

  • U.S. prices were 256 percent of those in the 32 comparison countries combined.
  • In comparisons with individual countries, U.S. prices ranged from 170 percent of prices in Mexico to 779 percent of prices in Turkey.
  • The gap between U.S. prices and prices in other countries was larger for brand-name originator drugs.
  • U.S. prices were 84 percent of prices in all non-U.S. countries for unbranded generics.
  • U.S. prices were 190 percent of prices in other countries after adjusting U.S. prices downward to account for rebates and other discounts.

Table of Contents

  • Chapter One

    Introduction and Background

  • Chapter Two

    Prior Studies Presenting Results from Systematic Comparisons of Drug Prices Between Countries

  • Chapter Three

    Price Index–Based Drug Price Comparisons Using 2018 Data

  • Chapter Four

    Discussion

  • Appendix A

    Comparison of Part B Drug Brief and RAND Methodology

  • Appendix B

    Counts and Shares by Exclusion Step

  • Appendix C

    Price Index Results by Country

Research conducted by

This research was funded by the U.S. Department of Health and Human Services Office and carried out within the Payment, Cost, and Coverage Program in RAND Health Care.

This report is part of the RAND Corporation Research report series. RAND reports present research findings and objective analysis that address the challenges facing the public and private sectors. All RAND reports undergo rigorous peer review to ensure high standards for research quality and objectivity.

Permission is given to duplicate this electronic document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND PDFs to a non-RAND Web site is prohibited. RAND PDFs are protected under copyright law. For information on reprint and linking permissions, please visit the RAND Permissions page.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.