Americans pay more for brand name drugs than in other countries

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A report released today by the Commonwealth Fund confirms what has long been the common wisdom about drug prices in this country: Americans pay more for brand-name prescription medications than do residents of most other countries.

Per capita spending on pharmaceuticals is nearly three times the average of other member nations of the Organisation for Economic Co-operation and Development (OECD), according to report.

The report compared prices of the first 10 drugs chosen for Medicare price negotiations to prices for the same drugs in seven other countries. In all but one case the United States ranked the highest. For six drugs, Switzerland had the second highest price, and Australia usually showed the lowest price. 

WHY THIS MATTERS

Prices after discounts and rebates in the U.S. are higher than almost all prices before discounts and rebates in peer countries, except for Xarelto. This leaves significant room for further reductions in Medicare negotiation, when compared with other countries, the report said. For the 10 selected drugs, the price in the U.S. is three to eight times the price in every comparison country. Rebates in the U.S. reduce prices by 9% to 50% from retail to net price.

The estimated net price of Eliquis in the U.S. is still higher than the list retail price of the second-highest country, Switzerland. With the rebate, the net price to Americans is $4.11, compared to $2.56 in Switzerland and $1.16 in Australia.

At $9.57 with applied rebate, the estimated U.S. net price of Entresto, to treat heart failure, is more than double Switzerland's list retail price of $4.51.

The estimated net price of Xarelto is less in the U.S. than in Japan -- the only drug where this is the case. The price in the United States is $7.87 with rebate, compared to $12 in Japan.

A more expensive net price drug is Imbruvica: $436.54 in the United States compared to $325.91 in Switzerland and $89.68 in Australia. The drug is an antineoplastic to treat cancer.

Enbrel, to treat severe rheumatoid arthritis, is $1,693.20 before rebate in the United States. The $491.03 rebate brings the price down to $1,202.17, compared to $455.92 in Switzerland and $319.68 in Canada.

Stelara, the highest priced drug on the list of 10 drugs studied, is used to treat plaque psoriasis and psoriatic arthritis. Even accounting for a $5,287.87 rebate, the net price in America is $12,946.15, compared to Canada's price of $6,230.05 and $2,430.60 in Australia.

This analysis was conducted with data from IQVIA, a U.S.-based company that collects international comparative pharmaceutical data and information made available by the Medicare Payment Advisory Commission (MedPAC), an independent congressional agency that advises the U.S. Congress on issues affecting the Medicare program.

In 2022, high costs forced one of five U.S. adults aged 65 and older to skip or delay filling a prescription, miss or reduce doses, or use someone else's medication, according to the Commonwealth Fund.

More than half of patients resort to cost-coping strategies such as coupons or free samples because they can't afford their medications, the report said. These stopgap measures can have particularly serious consequences for older people who rely on medications to control chronic health conditions.

THE LARGER TREND

The 2022 Inflation Reduction Act gave the Centers for Medicare and Medicaid Services the ability, for the first time, to negotiate drug prices in Medicare for a small group of prescription drugs. 

Negotiations for the first 10 drugs will begin in February, with price changes taking effect in 2026. 

The number will increase to 15 additional Medicare Part D drugs in 2027, up to 15 Parts B and D drugs in 2028, and up to 20 drugs in subsequent years.

These price negotiations are projected to save the government $100 billion through 2031, savings that will go in part toward funding a costly provision of the IRA that caps Medicare beneficiary spending for Part D drugs at $2,000 per year starting in 2025, the report said.

The first 10 drugs to be negotiated by Medicare – used to treat conditions such as blood clots, diabetes and autoimmune disorders – were selected because they account for a significant portion of Medicare Part D spending. They meet key criteria set by the IRA for negotiable drugs: no generic versions available, and they are either small-molecule drugs in pill form that have been on the market for at least seven years or biologics that have been on the market for at least 11 years.

The report's data is from IQVIA, a company that collects international comparative pharmaceutical data, and the Medicare Payment Advisory Commission, an independent congressional agency that advises the U.S. Congress on issues affecting the Medicare program.

Dozens of pharmaceutical companies will be required to pay rebates to Medicare for price hikes on prescription drugs that went against the mandate of the Inflation Reduction Act, the Biden Administration announced yesterday.

In December, the Department of Health and Human Services named the first 10 drugs under Part D selected for the first cycle of Medicare drug price negotiations, another provision of the Inflation Reduction Act. These first 10 drugs make up nearly 20% of spending in the Medicare Part D drug benefit.

The Part D drugs selected for price negotiations are: Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara and NovoLog/Fiasp. 

The Inflation Reduction Act, which narrowly passed in August 2022, keeps drug prices in Medicare from rising faster than inflation.

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org