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RAND: U.S. brand-name drug prices nearly 3 times higher than other countries

Drug prices in the United States are up to three times higher than those of other nation, a new study has found. Photo by Thomas Breher/Pixabay
Drug prices in the United States are up to three times higher than those of other nation, a new study has found. Photo by Thomas Breher/Pixabay

Jan. 28 (UPI) -- Brand-name prescription drug prices in the United States are nearly three times higher than those in 32 other high-income countries, according to a report released Thursday by the RAND Corporation.

The cost differences include prices for both brand-name and generic drugs, the researchers said.

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Branded prescription drugs alone are priced 3.4-times higher in the United States than in other countries, the data showed.

Prices for unbranded generic drugs -- which account for 84% of drugs sold nationally, but only 12% of spending -- are slightly lower in the United States than in most other nations.

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"Brand-name drugs are the primary driver of the higher prescription drug prices in the U.S.," report co-author Andrew Mulcahy said in a press release.

"We found consistently high U.S. brand-name prices regardless of our methodological decisions," said Mulcahy, a senior health policy researcher at RAND, a nonprofit, nonpartisan research organization.

The new RAND report is based on 2018 data and compares U.S. drug prices to those in other countries in the Organization for Economic Co-operation and Development.

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Mulcahy and his colleagues used manufacturer prices for drugs because net prices, or the charges ultimately paid for drugs after negotiated rebates and other discounts are applied, are not available.

Even after adjusting prices downward based on an approximation to account for these discounts, which are negotiated between insurance companies, pharmacies and the U.S. Centers for Medicare and Medicaid Services, charges nationally for brand-name drugs remained substantially higher than those in other countries.

Among the G7 nations, Britain, France and Italy generally have the lowest prescription drug prices, while Canada, Germany and Japan tend to have higher prices, the data showed.

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Meanwhile, some of the highest-priced drugs in the United States are brand-name drugs that can cost thousands of dollars per dose and are used to treat life-threatening illness such as hepatitis C or cancer, the researchers said.

That's why the United States accounted for 58% of the $795 billion spent on prescription drugs among the OECD nations in 2018, while making up just 24% of the drugs used, they said.

Drug spending nationally increased by 76% between 2000 and 2017, and the costs are expected to increase faster than other areas of healthcare over the next decade as new, expensive specialty drugs are approved, according to the researchers.

"Many of the most-expensive medications are the biologic treatments that we often see advertised on television," Mulcahy said.

"The hope is that competition from biosimilars will drive down prices and spending for biologics, but biosimilars are available for only a handful of biologics in the United States," he said.

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