The shocking truth about how much more Americans pay for medicine

My mom and I were having lunch the other day when I asked her how her latest visit to her gastroenterologist had gone. She had been having stomach trouble and let’s just say that things hadn’t been moving as they should in her digestive tract.

She said that she thought the visit had gone well. Her doctor seemed to understand and be sympathetic to what she was going to and had given her a prescription for a new medication that he said would really help. In fact, he said that his patients that had used it so far had done really well on it and gotten relief from their symptoms.

So far, so good, right?

At least right up to the point where my mom got to the pharmacy to pick up her prescription…

Even after her insurance paid their portion, my mom was on the hook for over $450 for a single month of the medication.

Yup, $450, an amount most people would consider a decent car payment for just one month’s worth of the drug.

Needless to say, my mom walked away without the medication and no better off that she was before she saw the doctor.

What’s crazy is that people in other areas of the world don’t pay prices even close to the ones we’re charged for prescription drugs. In fact, when I spoke to my cousin who lives in Switzerland about my mom’s experience, he was floored and said that even the most expensive drug had never cost him more than $100.

So, what’s the difference? Why do we pay more than people in other countries for our prescription medications and how much more do they really cost?

Up to 7,000 percent higher

A new study by researchers at the Johns Hopkins Bloomberg School of Public Health answered those exact questions.

The team examined drug prices of 79 brand-name prescription drugs that are under patent — this means that no generic versions are available so they’re generally more expensive. The researchers chose the drugs that are responsible for the greatest spending on Medicare Part D in the United States.

They then compared the prices to what is paid in Japan, the United Kingdom and the Canadian province of Ontario — choosing these countries because they are very similar to the U.S. in their per capita income or what the people who pay for the drugs can afford.

They looked at a wide range of medications from ones that treat blood clotting and diabetes to antivirals and immunosuppressants.

And, they found that before rebates, the average drug prices in the U.S. were 4.3 times higher than prices in the U.K., and 3.8 and 3.4 times higher in Japan and Ontario, respectively.

After rebates were taken into account, the U.S. had average drug prices 3.6 times higher than the U.K., 3.2 times higher than Japan and 4.1 times higher than Ontario.

In other words, for the exact same prescription a person in Ontario may pay $100 while in the U.S., you’re charged $410.

And, that wasn’t the end of the bad news…

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The team also discovered that there is a huge variation in drug prices between the U.S. and other countries. While some drugs may be only 30 percent more expensive in the U.S., others are a whopping 7,000 percent higher!

Some drugs that you can count on to cost more include:

• Diabetes drugs, which are nine times more expensive in the U.S. than the U.K.
• Injectable drugs, which are a full 11.5 times more expensive in the U.S. compared to the U.K.

The Medicare differential

So, why the difference in price? Why are we forced to pay more or go without medications we need to stay healthy or even save our lives?

Well, according to the researchers, it all comes down to the system Medicare uses to price drugs. While the U.K. sets drug prices by looking at the value of the drug, Japan uses external references along with a formula that continually lowers the price and Canada employs a combination, Medicare lags behind the times, letting drug companies set their prices and we’re left to pay.

If the Medicare program used the same prices as these other countries, the estimated savings to Medicare Part D would have been almost $73 billion in 2018 alone, the study found.

John Hopkin’s researchers say if Medicare used the same price setting tools as the other first world countries, Medicare spending would have been reduced by more than 70 percent in 2018 alone!

The findings will be published in the May issue of Health Affairs.

U.S. prescription drug prices for brand-name drugs are the highest in the world. One approach to lower U.S. prescription drug prices is to benchmark drug prices to those paid in other countries using a pricing model known as external reference pricing. An estimated 29 European countries as well as Australia, New Zealand, Brazil and South Africa use this approach for the purposes of setting and negotiating the price of a drug.

“Every year we pay more for brand-name drugs and other countries pay less for the same drugs,” says Gerard Anderson, Ph.D., a professor in the Bloomberg School’s Department of Health Policy and Management and the paper’s senior author.

“Ideally, the U.S. should be paying similar prices to other countries,” says Anderson. “In fact, Medicare beneficiaries and taxpayers are paying much more for the same drugs as other countries. Given that many Medicare beneficiaries cannot afford their drugs, this is a serious problem that does have a solution.”

So, if you like my mom, have found that the cost of prescription drugs in the U.S. has priced you out of the care you need, call or write your congressman. Until a change is made in how prescription medications are priced in this country, too many people will suffer.

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Sources:

1. External reference drug pricing could save Medicare tens of billions — Johns Hopkins University Bloomberg School of Public Health