Prescription drug prices in the United States

Prescription drug prices in the United States; Prescription drugs cost more in the U.S. than anywhere else, both overall and per person. In 2023, Americans spent over $600 billion on these medicines.

Despite this spending, many people struggle to afford their prescriptions—about 1 in 4 say costs are a problem, and nearly 30% have skipped or cut doses to save money.

High prices are linked to patents, limited competition, no broad government price controls, and complicated, secretive pricing between drug companies and insurers.

Critics say these prices harm both wallets and health, especially for people with chronic diseases. Recent laws, like the 2022 Inflation Reduction Act, allow limited federal price negotiation, but bigger reforms—such as linking U.S. prices to other countries’ rates—are still under debate.Congressional Budget Office. (2022). Estimated Budgetary Effects of the Inflation Reduction Act of 2022. https://www.cbo.gov/publication/58366Sood, N., Shih, T., Van Nuys, K., & Goldman, D. (2017). Prescription Drug Pricing. Health Affairs Policy Brief. https://www.healthaffairs.org/do/10.1377/hpb20171409.000178/full/healthpolicybrief_178.pdfDuggan, M., & Scott Morton, F. M. (2010). The Effect of Medicare Part D on Pharmaceutical Prices and Utilization. American Economic Review, 100(1), 590–607. https://www.aeaweb.org/articles?id=10.1257/aer.100.1.590IQVIA Institute. (2024). The Global Use of Medicines 2024: Outlook to 2028. https://www.iqvia.com/insights/the-iqvia-institute/reports-and-publications/reports/the-global-use-of-medicines-2024-outlook-to-2028Kaiser Family Foundation (KFF). (2023). Public Opinion on Prescription Drugs and Their Prices. https://www.kff.org/health-costs/poll-finding/public-opinion-on-prescription-drugs-and-their-prices/

History
Pharmaceutical drugs are unique in U.S. healthcare because producers can set prices with few limits, unlike in most other countries that have price controls. As of 2004, brand-name drugs cost much more in the U.S. than in countries like Canada, India, and the UK, while generic drugs were sometimes more expensive in Canada.

In 2003, Congress created Medicare Part D, which banned Medicare from negotiating drug prices. This allowed manufacturers to set their own prices, leading to wide price differences. Other smaller U.S. government health programs, such as the Veterans Health Administration, Medicaid, and the 340B Drug Pricing Program, do use price controls.

Between 2000 and 2004, U.S. drug prices for commonly used prescriptions rose 24.5%, with brand-name drugs increasing three times faster than generics.

In 2007, AARP reported that drug prices were rising faster than overall inflation, though the American Enterprise Institute argued the study exaggerated the increases.

References

Category:Health in the United States