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Did you know? Drug prices in the United States are 256% higher than in other countries! Why is this?
Prescription drug prices in the United States continue to be among the highest globally, a phenomenon that has become a core issue in many public health and economic policy discussions in the 21st century. According to a comprehensive bulletin in 2021, prescription drug prices in the United States are 256% higher compared with 32 other countries. What are the reasons behind this?
History of drug prices
One of the hallmarks of the pharmaceutical industry is that manufacturers are free to set prices, which makes the United States have some of the highest prescription drug prices in the world. As early as 2004, studies have shown that brand-name drug prices in the United States are much higher than in countries with price controls such as Canada and the United Kingdom. This situation was further exacerbated after Congress passed the Medicare Prescription Drug Improvement and Modernization Act in 2003, which prohibited Medicare, the largest single-payer health insurance system in the United States, from entering into price negotiations with pharmaceutical companies.
According to an investigation into drug prices, drug manufacturers have absolute freedom to set prices in the United States, which directly leads to market disorder and soaring drug prices.
Efforts to seek reform
As public dissatisfaction with high drug prices heats up, many public surveys show that 71% to 86% of Americans support allowing Medicare to negotiate prices with pharmaceutical companies. Nonetheless, two attempts by the Democratic-controlled House of Representatives to advance related legislation failed, mainly due to opposition from the Republican-controlled Senate.
Price negotiations through the Inflation Reduction Act
The passage of the Inflation Reduction Act of 2022 will allow the U.S. Department of Health and Human Services to negotiate the prices of certain prescription drugs starting in 2026. This move is widely regarded as an important step in drug price reform.
In the future, the scope of drug price negotiations through the Senior Medical Security Plan will gradually expand, which is undoubtedly good news for patients who are looking forward to lower drug prices.
Why are drug prices so high?
Data show that the cost of prescription drugs in the United States accounts for a considerable part of the national medical expenditure, and the price increase of specialty drugs is particularly prominent. Experts point out that drug price volatility and opacity make it difficult for patients to predict and control drug costs. At the same time, the lack of effective competition and price control environment in the market has also led to the sky-high prices of drugs.
Health Impact: Prescription Medication Adherence Issues
Due to high drug prices, many patients choose not to take their medications as prescribed. A 2015 survey showed that 25% of Americans failed to take their medications as scheduled due to high drug prices. In the long run, this not only increases the health risks of patients, but also places a greater burden on the overall U.S. medical system. In comparison, only 8% of people in Canada reported not taking their medications on time due to price.
Trends of foreign drug purchases
Faced with high drug prices, many Americans choose to purchase drugs from other countries through various channels. Since 2004, it is estimated that more than $100 million in pharmaceuticals have been imported from Canada to the United States each year, reflecting the wide disparity in U.S. drug prices.
The future of prescription drugs
High drug prices are not only a burden for patients, but also a problem that urgently needs reform in the medical system. As more and more voices call for open drug price negotiations and market transparency, perhaps future medical policies can bring about substantial changes and fundamentally improve the medical environment for patients. This change is ultimately expected to reduce U.S. disparities in global drug spending and provide every patient with the drugs they need at a more reasonable price.
In this context, can the U.S. drug market get out of this predicament and truly rationalize prices so that every patient can afford their drug needs?
