Why drugs cost more in America? This is an EpiPen. It’s a device that injects you with adrenaline if you’re having a possibly deadly allergic reaction. If you have severe allergies, you basically need it. And if you live in the UK, an EpiPen will cost you the equivalent of 38 US dollars. But if you live in the US, it’ll cost you $300.
And it’s not just the EpiPen. Let’s look at five of the top selling prescription drugs in the world. Advair, a brand-name asthma inhaler: more expensive in the US. Lantus, a type of Insulin: more expensive in the US. Sovaldi for hepatitis C? Yup. Costs more in the US. Humira for arthritis. Crestor for cholesterol: more expensive in the US. So here’s an unsurprising chart: Americans spend more on prescription drugs than anyone else in the world.
Why? The first thing you have to understand is that in the US, drugs get to patients differently than almost everywhere else. Let’s look at that popular hepatitis C drug, Sovaldi. In 2014 Sovaldi became the first drug to completely cure hepatitis C. Here’s how it got to market in, for example, the UK.
First a government agency had to decide that Sovaldi was safe and that it actually worked. Then it was evaluated by a regulatory agency to see if was worthwhile: Are there too many side effects? Is there already a similar drug? Is there a cheaper option? Sovaldi was deemed worthwhile.
Next, they negotiated the price. In the UK, the government buys the stock of medicine for the country. That means they’re usually able to get a lower rate, kind of like a bulk discount. Which keeps prescription drugs cheaper for UK citizens.
In almost every developed country besides the US, this is what the system looks like: Safety evaluation, assessment of whether the country needs it, price negotiations, sold to patients. Now let’s look at the system in the US.
First, the drug is evaluated for safety, but that’s it. If it’s safe, they can sell it, end of story. Drugs are sold by the drug companies to patients, usually through insurance.
And since the US system lets them sell it for any price, Gilead, the company that makes Sovaldi, charged Americans more for it. When it first came to market, the entire treatment cost $84,000 in the US. In the UK? Just about $58,000 US dollars. That’s still a lot of money, but it’s a full 30% less.
So it seems like the UK has the better system right? Well, it’s complicated. These photos are from protests in the US against the high price of EpiPens. And these are photos from protests in the UK, over the lack of access to a cystic fibrosis drug called Orkambi. That’s because when there’s a committee that determines whether a new drug is worthwhile — sometimes they say no.
And when they negotiate the prices, sometimes they don’t come to an agreement and hit a standoff. That’s what’s happening with Orkambi. Both systems require trade offs. Regulated drug markets tend to make drugs more affordable, but some drugs are completely unavailable.
And while the US has more drugs technically available, they’re often too expensive to actually afford. Americans without insurance are the most likely to skip medication because of the cost. Even Americans with insurance, are second. But the commonality between these two systems — is the drug companies.
Developing new drug products isn’t cheap and they’re for-profit businesses. If Gilead didn’t think that researching and developing a hepatitis C cure, would make them money in the end, they might not have. And with these regulated markets keeping costs down, the only place the drug companies can really make their money is, you guessed it, the US.
Americans are essentially subsidizing the cost of drugs for the rest of the world. In other words, a big part of why prescription drugs are more expensive in the US is because they’re cheaper everywhere else. If you’d like to continue exploring the importance of easier access to medicine and vaccines, then I highly recommend a documentary called “Viruses: Destruction and Creation,” available now on CuriosityStream.
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