Americans' Health-Care Costs Are Too Damn High, Study Finds

[Uncle Joe]

6. Here is some information on that subject.

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Is it really that surprising that the U.S. spends more on prescription drugs than other nations? After all, we’re used to hearing about how obese and unhealthy we are.

It is true that Americans are slightly less healthy than people in other high-income countries, but one of our study’s most interesting findings was that, despite higher spending, Americans actually consume less of some classes of medicine. For example, Americans consume nearly 25 percent fewer “days of treatment” worth of hypertension drugs than people in comparable countries. So it’s not a phenomenon of greater utilization — you’re spending more but getting less.

And why do we think that is?

Well, in addition to looking at the utilization question, which doesn’t appear to be a significant factor, we looked at treatment choices, use of generics, and, of course, price. Treatment choices are definitely a factor — Americans tend to choose more expensive treatment options than their counterparts in other countries. But the factor that accounted for the lion’s share of the difference in spending was simply price. You pay more in the U.S. for the same drugs, somewhere between 80 percent and 150 percent more.

If they’re pharmacologically the same wherever you buy them, why do drugs cost so much more in the U.S. than elsewhere?

You might say it’s because they can be priced higher. In many countries with universal health coverage, there is a single entity that’s responsible for [purchasing drugs and] negotiating prices. Even in a small country, those purchasers can have enormous leverage in negotiating discounts or even setting allowable prices. The U.S. has a very different system with lots of buyers [such as Medicare, state Medicaid agencies, and private insurers] and no price controls. Couple that with higher list prices in the U.S., and even after the discounts some purchasers negotiate, you end up with substantially higher prices.

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https://www.commonwealthfund.org/publications/journal-article/2018/nov/whats-driving-prescription-drug-prices-us