Myths and Realities About Why Prescription Drug Prices in the United States Are So High

Abstract

Prescription medications cost more in the USA than in any other developed country. The reasons for those high prices are contested between defenders of the pharmaceutical industry and critics. The industry claims that prices are due to the high cost of research and development necessary to bring a new drug to market and because high US prices subsidize lower prices in other developed countries. Critics of the industry maintain that high prices are the result of high profit levels, the rapid uptake of new more expensive drugs that offer little to no therapeutic advantage over older less expensive products, the cost of promotion, and, finally, the fact that companies base prices on what the market will pay. This article examines the evidence behind each of these claims. High drug prices have both economic and clinical consequences; however, to deal with prices, it is first necessary to separate myths from reality.