House Report Outlines Depth of High Prices Americans Pay for Prescription Drugs

A report out this week from the House Ways and Means Committee details the extent to which Americans pay more for drugs than other countries—nearly 4 times as much, in fact.

Although prices vary, Americans pay more, even after accounting for rebates, and the United States could save $49 billion a year just on Medicare Part D by using average drug prices for comparator countries, the report says. In 2016, US spending on combined retail (dispensed at the pharmacy) and non-retail (dispensed in physician offices) drugs totaled $457 billion. Medicare alone spent nearly $130 billion on prescription drugs that year: $99.5 billion for Part D pharmacy drugs and $29.1 billion for Part B physician-administered drugs.

Between 2011 and 2016, drug spending nationwide grew by 27%, more than 2.5 times the rate of growth in inflation.

The report examines patterns of US drug pricing relative to other international comparator countries, examining price differentials among 79 drugs sold in 11 countries and the United States in 2017 and 2018. The 11 countries are the United Kingdom, Japan, Ontario, Australia, Portugal, France, the Netherlands, Germany, Denmark, Sweden, and Switzerland. Danish patients spent on average $318 annually per capita on drugs, the lowest in the study, while US patients paid $1220 each year per capita, the highest.

“The system in place now does not work for the Americans who depend on it—by all measures, US consumers pay too high a price for drugs,” the report says.

Across the 79 drugs in the sample, the average list price per dose was $152.92, ranging from $0.08 for Premarin, a medication used to treat symptoms of menopause, in

the United Kingdom, to $16,597 in the United States for brand name ustekinumab, sold as Stelara, a medication used to treat moderate to severe plaque psoriasis. Stelara was between 3.5 to 6.75 times more expensive in the United States than in other countries, the report said.

The report also looked at different disease groups, including rheumatoid arthritis, multiple sclerosis (MS), and diabetes.

Humira, an anti-inflammatory drug, is the best-selling prescription drug in the world. The brand-name adalimumab from AbbVie faced competition in Europe from biosimilar adalimumab for the first time in late 2018 but no adalimumab biosimilars are slated for US launches prior to 2023.

Since 2012, Humira has doubled in price in the United States and is currently priced at $2436.02 per dose, or about 500% of the international average. After the United States, the next highest price for Humira is in Denmark, where it costs $787.10 per dose.

Insulin saw significant variation by drug. In the United States, Lantus SoloStar was 170% of the average in other countries, while the HumaLOG Mix 75-25 KwikPen was priced at 620% of the non-U.S. price. Lantus products, from Sanofi, account for more than $4 billion of annual Medicare spending.

Per dose, insulin averaged $34.75 in the United States, which is 247% of the $10.58 price in other countries. Differentials were wider in non-insulin drugs, where 6 of the 7 non-insulin medications cost 600% to 1100% more in American than in other countries.

Total Medicare Part D spending on insulin increased by 840% from $1.4 billion to $13.3 billion between 2007 and 2017, far outpacing the growth in number of beneficiaries using insulin.

In the United States, the price of the MS drugs in the sample were typically priced at 350% to 670% of the international average. The average US list price for MS drugs was $769.92 per dose, compared with only $133.99 per dose internationally, making these drugs 5.75 times more expensive in America. Patients with MS saw their yearly cost-sharing increase more than 7-fold over the past decade.

The paper discusses some of the ways that other countries manage to hold the line on drug costs, which policymakers could explore for the US setting. For example, an external reference pricing (ERP) system, where the price of a drug in one or several countries is used to create a benchmark or reference price for the purposes of setting or negotiating drug prices in a given country, is one such way. Almost every European country, as well as other developed nations—except for Denmark, Sweden, and the United Kingdom—has established some form of an ERP.

Many countries also use an internal reference price, which is typically used for pricing generics—they are meant to determine drug prices based on market equivalents or similar products within the country.

The Trump administration’s plan to create an International Price Index (IPI) blended rate is an example of an attempt at an ERP, although the report noted that the IPI lacked detail and was limited to Part B, which represents a smaller share of drug spending than Part D.

Last week, House Speaker Nancy Pelosi, D-California, unveiled her plan to lower drug prices by giving Medicare the ability to negotiate certain drug prices and seek rebates from drug makers if their prices soar above inflation, including in Medicare Part D. Such negotiations are currently barred by federal law; instead, prescription drug plans must work together with drug manufacturers to obtain drug discounts.

Despite the overwhelming public support for the idea—86% across political parties—getting bipartisan legislation passed as the House begins an impeachment probe of the president appears improbable, according to various press reports.