From the U.S. Government Accountability Office, www.gao.gov

Transcript for: Is the U.S. Paying More for Prescription Drugs?

Description: There's a perception that U.S. consumers pay more for
prescription drugs than consumers in other countries. But do we? And
what might explain the price differences for the same drugs? We'll talk
with GAO's John Dicken to find out more.

Related GAO Work: GAO-21-282, Prescription Drugs: U.S. Prices for
Selected Brand Drugs Were Higher on Average than Prices in Australia,
Canada, and France

Released: April 2021

[Intro Music]

[John Dicken:] The overall price for drugs in the U.S. is generally two
to four times higher than other countries, according to the drugs we
compared. 

[Holly Hobbs:] Hi and welcome to GAO's Watchdog Report, your source for
news and information from the U.S. Government Accountability
Office--celebrating 100 years of fact-based, non-partisan government
oversight. I'm Holly Hobbs. There's a perception that U.S. consumers pay
more for prescription drugs than consumers in other countries. But do
we? And what might explain the price differences for the same drugs? 
Today, we'll talk with John Dicken--an expert on health care policy, and
a director in our Health Care Team--who has a new report out on
prescription drug prices in the U.S. and how they compare to those
abroad. Thank you for joining us John! 

[John Dicken:] Great. Thank you!

[Holly Hobbs:] So John, do prescription drugs cost more in the U.S. than
they do in other countries? 

[John Dicken:] Yes. Often prices for prescription drugs are
significantly higher in the U.S. than in other countries. The overall
costs for the drugs we looked at were often two to four times higher in
the U.S. than in the other countries we looked at. 

[Holly Hobbs:] So, how do we know they cost more?

[John Dicken:] Well our report took 20 different brand name drugs that
were the same across all four countries--the U.S., Canada, France, and
Australia. In the U.S., we were also able to reflect rebates and price
concessions that manufacturers pay, whereas in the other countries we
used publicly available prices. So when we found that on average the
drug prices in the U.S. were these brand drugs were 2 to 4 times higher,
that's actually understatement because we are were comparing lower
net-prices in the U.S. than higher prices in the other countries.  

[Holly Hobbs:] And what differences were there between these countries
and the U.S. that might explain the price differences? 

[John Dicken:] Yeah, there are significant differences. One of the key
differences is just how drugs are paid for and regulated in the
countries. In the U.S. and Canada, there's not universal drug coverage.
Many Americans and Canadians will get drug coverage either through
public programs or through private employers or other health plans. But
some individuals don't have drug coverage. In the other countries there
tend to be universal coverage for drugs and more regulation of those
drug prices. So, the coverage and the regulations are one factor, but
there are a number of other issues from costs along the supply
chain--that the U.S. has a number of other entities that are involved in
the supply chain for drugs, whether it's wholesalers or pharmacy benefit
managers, or retail pharmacies. And so those also can affect the costs.
And the final thing I would note is that drug manufacturers note that
there are more choice of drugs and more spending for innovation in drugs
in the U.S. And so that also increases costs for consumers in the U.S.  

[Holly Hobbs:] And you said, our report looked at some specific
brand-name drugs. Can you give us an example of a drug that you looked
at, and how the price for that drug differed in and outside of the U.S.? 

[John Dicken:] Sure. We did look at Anoro Ellipta, which is a commonly
prescribed drug for people with chronic obstructive pulmonary disease.
We found very different prices that the consumer is paying, again
depending in part on what their health insurance coverage is for drugs.
So for Anoro Ellipta in the United States, an individual who does not
have health coverage for prescription drugs may be paying more than $500
for a prescription for Anoro Ellipta, whereas an individual who has a
fairly standard Blue Cross employer-sponsored health plan with drug
coverage, would be paying about $55 dollars In Canada, for example,
there may also be individuals, who do not have drug coverage. But that
full cost in Canada is much lower than in the United States. Instead of
the $500 or more in the U.S., the Canadian would be paying on average
about $85. And then also in Canada there are programs, such as for
seniors, that would make their out-of-pocket costs much lower. Maybe
just $5 for that prescription. When we looked at Australia--Australians
would pay one of two rates --either $28 for Anoro Ellipta or any other
brand name drug or about $5 depending on if they were a senior or a
veteran that may have lower costs. And then finally in France, a
consumer would be paying about $34 for that prescription. 

[Holly Hobbs:] And the reason we looked at brand name drugs,
specifically, is 'cause they're easier to compare?

[John Dicken:] Yeah. Two reasons. It's much easier methodically to
compare and then secondly it is the bulk of drug spending. 

[Holly Hobbs:] So why are some U.S. consumers paying so much more for
brand name drugs than they would in other countries? 

[John Dicken:] Yeah, and so reasons include how much of the costs the
consumer is paying in total. The consumer may be paying all of the costs
to the pharmacy. They may only be paying a portion of the costs that
their health plan has negotiated with the pharmacies. In other countries
that had more universal coverage or they' regulating prices more, the
prices for the drug are significantly less variation and often at a more
defined amount.

[Music]

[Holly Hobbs:] So it sounds like there are a number of reasons why U.S.
consumers could be paying more for prescription drugs--including factors
like how drugs are regulated, manufactured and supply chain costs, as
well as how Americans pay for prescriptions through private or public
insurers. John, why should the federal government or policymakers care
about this issue?

[John Dicken:] So, beyond the costs for the consumers themselves the
overall price for drugs in the U.S. is generally 2 to 4 times higher
than other countries, according to what we found for the drugs we
compared. And while that's notable, it likely understates how much more
the net-prices in the U.S. are than in other countries. Given that
Medicare and Medicaid are the largest payers for drugs, that's a
significant cost for U.S. taxpayers as well as for consumers. 

[Holly Hobbs:] And last question John--what's the bottom line of this
report?

[John Dicken:] The bottom line is that in general for the 20 brand name
drugs we looked at. Cost was 2 to 4 times higher in the U.S. for the
same drug than in France, Canada, or Australia. This is a significant
cost for consumers, when they shop at the pharmacy as well as for
private health plans and public payers such as Medicare and Medicaid. 

[Holly Hobbs:] That was John Dicken talking about GAO's recent review of
prescription drugs costs. Thank you for your time, John! 

[John Dicken:] Thanks so much. 

[Holly Hobbs:] And thank you for listening to the Watchdog Report. To
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