Florida’s plan to save money by importing medications from Canada, authorized this month by the Food and Drug Administration, has renewed attention on the cost of prescription drugs in the United States.
Research has consistently found that drug prices in America are significantly higher than those in other wealthy countries. In 2018, they were nearly double those in France and Britain, even when accounting for the discounts that can substantially reduce how much American health plans and employers pay.
“The U.S. market is the bank for pharmaceutical companies,” said Ameet Sarpatwari, an expert in pharmaceutical policy at Harvard Medical School. “There’s a keen sense that the best place to try to extract profits is the U.S. because of its existing system and its dysfunction.”
Here are six reasons drugs in the United States cost so much:
1. There is no central negotiator willing to walk away.
Other wealthy countries rely on a single negotiating body — usually the government — to decide whether to accept the price a pharmaceutical company wants to charge. In the United States, negotiations with drug makers are split among tens of thousands of health plans, resulting in far less bargaining muscle for the buyers.
Other nations also conduct careful analyses of how much additional benefit a new drug presents over drugs already on the market — and at what cost. If the cost is too high and the benefit too small, those countries are more willing to say no to a new drug.