International Differences in Drug Prices

Abstract

This paper addresses how and why drug prices differ across countries. Studies of international variation in drug prices reach varied conclusions owing to methodological and data disparities. Price differences do exist across countries, with the United States footing the highest bill, but the differences are not nearly as large as they appear at first glance. The higher prices in the United States are concentrated among a subset of brand-name drugs and among those without insurance covering drugs. Some U.S. health plans obtain price concessions from manufacturers similar to those obtained by national governments. Price concessions occur whenever purchasers are willing to let price be a consideration in decisions about access and utilization. In low-income countries the vast majority are unwilling to pay for effective drugs simply because they are unable to pay. Low-income nations need more price discrimination—and vastly lower prices—if they are ever to afford the world's most effective medicines.