Prescription Drug Spending – Why Is the U.S. an Outlier? What is the truth about what we spend and how to change that?

The rhetoric surrounding drug prices is more rhetoric than fact. Allowing the government to negotiate drug prices, even set prices has significant consequences not being discussed with the public.

The public is being mislead on many issues.

For example, 💊 drug prices mentioned are typically full retail prices which virtually nobody pays, 💊 most of the high prices are for new blockbuster drugs, 💊 prescription spending is 10% of total health care spending, 💊 84% of the US drug market is already generic drugs, 💊 to control spending other countries evaluate and limit or deny payment for certain drugs, 💊 to achieve any significant cost saving government negotiating drug prices means a narrow formulary thereby limiting the choice of drugs, 💊 Medicare drug vendors already negotiate drug prices and so do private insurers and pharmaceutical benefit managers for large self-insured employer group plans, 💊 to some extent the US is subsidizing drug prices in other countries, 💊 the possible impact of forced lower drug prices on innovation and creation of new drugs must be explored, 💊 it is misleading to say the the government finances drug research; government finances about one-third (see below 💊) of total costs limited to the initial primary research, 💊 development of a new drug costs about $1 billion

Read this:

Other countries generally assess not just whether a new drug is effective, but whether it is more effective than existing therapies — and, in some cases, whether it is cost-effective. Thus, while U.S. per-person drug utilization may be similar to that in other high-income countries, new research indicates that the mix of drugs Americans consume includes a higher proportion of newer, more expensive medications — yet with no evidence of better health outcomes.

It is crucial to note that America’s higher spending on prescription drugs (and the higher prices Americans pay) does not necessarily mean the spending is wasteful. A larger, more profitable pharmaceutical sector may attract investments resulting in more innovative and effective drugs in the future. For this reason, policymakers who wish to reduce America’s prescription drug bill need to weigh, on the broader merits, the pros and cons of different cost-control policies.

Source: Prescription Drug Spending Why Is the U.S. an Outlier?

💊 “The pharmaceutical industry is the largest contributor towards funding research, funding over 60 percent. The government contributes to about a third of the costs, with foundations, advocacy organizations and individual donors responsible for the remaining investments.” Source:

It may be that society cannot and does not want to sustain the current level of drug prices or spending. It may be that profits of drug companies are out of line in some cases. However, there are significant consequences related to how we “solve” our perceived problem. We better understand those consequences before jumping on the cut drug prices bandwagon.

One comment

  1. I find more disturbing than “high prices” the fact that around 80 per cent of generic prescription drugs are made in China or India. The FDA is supposed to monitor overseas drug makers as closely as domestic ones. In reality? They do not. I was recently contacted by my pharmacy that a generic prescription medication that I take has been taken off the shelves. After seven or eight years had passed the Chinese manufacturer admitted that their product contained an impurity that is considered a carcinogen. (I now take another drug in the same class.)

    Several Indian manufacturers as well have been prohibited from importing drugs into the U.S., some after years of doing so. The companies have finally been caught falsifying lab data, diluting product, contaminating product etc.

    The scandal in my opinion is not that we pay too much, but that with generics from China and India, we are not necessarily getting what we pay for.


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