Why does the U.S. pay more for drugs?

Drug prices are higher in the U.S. than in many other countries.

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In Norway, an expensive place to live with many costs that are higher than in the United States, drug prices are 93% lower than in the U.S.

This is the same country where a gallon of gasoline costs $6.00 and a Big Mac is $5.65.

So why the difference in drug prices?

The reasons are many.

One of the reasons is that the U.S. funds a lot of the global drug industry earnings and efforts to find new medications and improve existing drugs.

Also, the U.S. has an aversion to rationing. Other countries set price caps and demand proof of the value of new drugs, sometimes refusing to cover medicines that they don’t think are worth the cost.

Medicare is the largest payer for prescription drugs in the United States and is unable to negotiate pricing.

Further driving the cost in the U.S. is that Americans prioritize patient autonomy and want to allow for individual choices, unlike in other countries where the government systems are the only large drug buyers.

It appears that the main reason for the cost is that the U.S. bears the burden of subsidizing global drug research.

If drug prices in the U.S. were to fall to European levels, the industry would almost certainly cut its research and development spending.

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