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New Prescription Drugs: Availability and Pricing in the U.S. and Other Wealthy Nations

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Zara Nwosu
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New Prescription Drugs: Availability and Pricing in the U.S. and Other Wealthy Nations

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U.S. Leads in Introduction of New Prescription Drugs

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A recent report by RAND, sponsored by the U.S. Department of Health and Human Services, highlights that the majority of new prescription drugs hit the U.S. market before they become available in other wealthy nations. This report provides a fresh perspective on the ongoing debate over efforts to cut down the high cost of prescription drugs in the U.S.

Contrary to the fears that cost-cutting measures would slow the rollout of new medications in the U.S., the study suggests that significant medications with considerable revenue potential are typically available across all wealthy nations within approximately a year of their first sale in the U.S. This finding is critical for policymakers aiming to find viable solutions for reducing prescription medication costs in the U.S.

U.S. Prescription Drug Prices Compared with OECD Countries

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Studies sponsored by the ASPE (Office of the Assistant Secretary for Planning and Evaluation) reveal that U.S. drug prices across all drugs (brands and generics) were almost 2.78 times as high as prices in other OECD (Organisation for Economic Co-operation and Development) nations in 2022. After adjusting for estimated U.S. rebates, prices for brand drugs in the U.S. remained at least 3.22 times as high.

The U.S. spends a higher and growing proportion of total drug spending on new drugs compared to other countries. Despite the high prices, most new drugs were still launched first in the U.S. before being introduced in other nations.

Gap Between U.S. Launch and Sales in Other Countries

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The RAND report used data from IQVIA MIDAS to examine the availability and timing of market entry for 287 new drugs launched between 2018 and 2022 in the U.S. and 26 comparison countries in the OECD. The gap between the U.S. launch and sales in other countries averaged about a year. Interestingly, the top 10 new drugs by spending in the U.S. in 2022 were all sold in several other countries.

Prescription Drug Costs in the U.S.

According to the U.S. Department of Health and Human Services, Big Pharma charged Americans two to three times more than what they charged people in other OECD countries for the same drugs in 2022. For instance, U.S. gross prices for insulin were nearly ten times the price in the United States than in France and the United Kingdom.

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However, a glimmer of hope resides in the Inflation Reduction Act. This Act expanded the financial protection available through the Low-Income Subsidy (LIS) Program for Medicare beneficiaries enrolled in prescription drug coverage. Initial offers were sent to manufacturers of the first ten drugs selected for drug price negotiation to help lower their prices.

Insulin Prices

Insulin prices in the U.S. have raised significant concerns. The RAND report reveals that the gross price of insulin in the United States is more than nine times higher than in 33 high-income comparison nations. Even after taking into account rebates and other discounts often provided by drug manufacturers, the price of a unit of insulin remained 2.3 times greater in the United States than in comparison nations.

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American Prescription Drug Spending

A report from RAND Health Care found that Americans pay almost three times as much for their prescription drugs as residents of other nations. Furthermore, brand-name drugs in the U.S. averaged 4.2 times the prices in comparable nations. However, unbranded generic drugs in the US run about two-thirds the average price found in other countries.

The U.S. accounted for 62% of the money paid to drug companies, but only 24% of the total drugs sold in OECD nations. Retail prescription drug spending in the United States increased by 91% between 2000 and 2020. Spending is expected to increase 5% a year through 2030, with prescription drugs now accounting for more than 10% of all health care spending in the United States.

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