Why Prescription Drug Prices in the US Are So High

Americans spend more on prescription drugs 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. In August, Congress passed a law aimed at cutting drug costs for elderly and disabled patients who rely on the government’s Medicare health program. The pharmaceutical industry opposes the change, and Merck & Co. is suing the government over it.

Average costs are about $1,300 per person per year. 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 4% 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. Plus patients in the US directly pay about 13% of prescription medicine costs out of their own pockets. In one survey, one in five adults in the US said they failed to complete a prescribed course of medicine because of cost. The figure was one in 10 in Germany, Canada and Australia.