 Show Photographer: Bill Oxford/iStockphoto/Getty Images July 19, 2022, 2:07 PM UTC Americans spend more on prescription drugs -- average costs are about $1,300 per person per year -- than anyone else in the world. It’s true that they take a lot of pills. But what really sets the US apart from most other countries is high prices. The median launch price of a new drug in the US in 2021 was $180,000 for a year’s supply. While drugmakers aren’t hiking prices of existing products quite as aggressively as they did prior to 2019, they still continue to steadily raise list prices around 5% a year, according to 46brooklyn Research, a nonprofit drug pricing research firm. While private insurers and government programs pick up the biggest share of the bill, high drug costs are ultimately passed on to members of the public through the premiums they pay to keep their insurance policies active and the taxes they pay to the government. The US Congress is weighing a proposal, backed by President Joe Biden, aimed at lowering prices. It would require the government’s Medicare health program for the elderly to negotiate the prices of certain big-ticket medicines with the manufacturers that produce them. The companies have fiercely opposed the policy. Outrage at drugmakers has been building in the US. The backlash first erupted in 2013 when Gilead Sciences released the groundbreaking hepatitis cure Sovaldi at $84,000 for a 12-week course. The steep price and stampede of patients to get the drug led many insurers to restrict coverage to the sickest patients. A probe by a Congressional committee concluded at the end of 2021 that drug companies had raised prices “ with abandon,” using anticompetitive strategies and manipulating the patent system and marketing exclusivities granted by regulators to do so. How are drug prices determined in the US?Pharmacies set their prices based on a formula, commonly a multiplier of AWP plus a dispensing fee (such as the AWP plus 20% plus $5). They sell the drug at that price or, if the patient has insurance, they submit that price to the payer.
How do U.S. drug prices compared with other countries?In 2019 (the latest year with internationally comparable data from the OECD), the U.S. spent $1,126 per capita on prescribed medicines, while comparable countries spent $552 on average.
How are drug prices set in Europe?The French system determines maximum drug prices based on added therapeutic value and external reference pricing. It employs negotiation to set prices and limits price increases. It caps total spending to a global budget. Each approach might be implemented in the United States or inspire similar reforms.
Do other countries regulate drug prices?France, Germany, Sweden, and the United Kingdom each use different types of policies for controlling prescription drug spending. Until recent years, these policies have relied heavily on regulating prices charged by drug manufacturers, with different systems providing varying degrees of pricing freedom.
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Unlike other countries, in the united states drug prices are set according to which of these?
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