- Prescription drug spending in the U.S. far exceeds that in other high-income countries
- Higher prices, and greater use of higher-priced drugs, make the U.S. an outlier on prescription drug spending
- Issue: Compared with other high-income countries, the United States spends the most per capita on prescription drugs.
- Goal: To compare drug spending levels and trends in the U.S. and nine other high-income countries — Australia, Canada, France, Germany, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom; consider potential explanations for higher U.S. spending; and explore patients’ exposure to pharmaceutical costs.
- Method: Analysis of health data from the Organisation for Economic Co-operation and Development, the 2016 Commonwealth Fund International Health Policy Survey, and other sources.
- Findings and Conclusions: Various factors contribute to high per capita drug spending in the U.S. While drug utilization appears to be similar in the U.S. and the nine other countries considered, the prices at which drugs are sold in the U.S. are substantially higher. These price differences appear to at least partly explain current and historical disparities in spending on pharmaceutical drugs. U.S. consumers face particularly high out-of-pocket costs, both because the U.S. has a large uninsured population and because cost-sharing requirements for those with coverage are more burdensome than in other countries. Most Americans support reducing pharmaceutical costs. International experience demonstrates that policies like universal health coverage, insurance benefit design that restricts out-of-pocket spending, and certain price control strategies, like centralized price negotiations,
can be effective.
U.S. health care spending, per capita and as a percent of GDP, dwarfs that of any other high-income country, and longitudinal trends reveal that the gap in spending between the United States and the rest of the world continues to grow. Understanding the components and drivers of health care spending is important for policymakers, providers, and patients.
One important component of overall health care expenditures is the amount spent on prescription drugs. This brief compares prescription drug spending in the United States and nine other high-income countries: Australia, Canada, France, Germany, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom. We explore how three factors that determine drug spending — drug utilization, the type and mix of drugs consumed, and the price of drugs — differ across countries. We then examine how these costs are borne by patients in these countries — in particular, the role insurance coverage and design plays in protecting patients, and specifically vulnerable populations, from the burdens of paying the ever-rising costs of pharmaceuticals.
Pharmaceutical Spending in the U.S. and Abroad
Prescription drug spending per capita is far higher in the United States than in the nine other high-income countries considered (Exhibit 1). This was not always the case. In the 1980s, several countries spent about the same amount per capita as the U.S. But in the 1990s and early 2000s, spending on prescription medications grew much more rapidly in the U.S. than in other nations. The mid-1990s saw a decade of rapid pharmaceutical growth in all countries, as annual numbers of FDA-approved drugs hit all-time highs, and sales of hypertensive and cancer drugs boomed.1 In the U.S., this was accompanied by expansions of coverage (including for prescription drugs) by the federal government, through such programs as the Children’s Health Insurance Program, Medicaid, and Medicare.