Prescription drug prices negotiated for the first time by the U.S. government are still on average more than double, and in some cases five times, the prices agreed to by drugmakers in four other high-income countries, a Reuters investigation found.
The U.S. health plan Medicare, which covers more than 67 million people, recently announced new maximum prices (link) for the first 10 high-cost drugs negotiated under the Biden administration’s inflation-fighting bill.
This is the first time Medicare has disclosed true drug prices, which are largely hidden behind a complicated U.S. system of rebates and discounts. The lower prices will result in savings of $6 billion in 2026 (link), the first year they take effect, Medicare says.
A Reuters review of publicly available maximum prices of other wealthy countries – Australia, Japan, Canada and Sweden – shows that these countries have negotiated far lower prices for the same drugs.
Thomson ReutersPrices for drugs included in U.S. Medicare’s first negotiations (Copy)
Thomson ReutersPrices for drugs included in U.S. Medicare’s first negotiations 2
A 30-day supply of nine of the ten drugs will cost Medicare $17,581 in 2026, compared to $6,725 in Sweden this year. For the tenth drug, Novo Nordisk’s insulin Novolog 
NOVO_B, no comparable prices were available.
“In the United States, we have always accepted that we pay too much compared to the rest of the world,” said Stacie Dusetzina, a professor of health policy at Vanderbilt University in Nashville.
It is an advantage for the United States to be the preferred customer, she said, pointing to the early availability of COVID vaccines as an example of that advantage.
Many countries have universal prescription drug coverage based on centralized price negotiations with manufacturers, but U.S. law has so far prevented Medicare – the country’s largest government program – from doing so.
Bristol Myers 
BMY said pricing was country-specific and depended on national healthcare systems and regulatory policies, while Merck 
MRK stated that it was not permissible to compare US prices with those of generics from overseas. Amgen 
AMGN declined to comment, and the other drugmakers did not respond.
A spokesman for the U.S. agency that oversees Medicare said the new law requires consideration of factors such as manufacturer data and the availability of alternative treatments, but Congress did not include review of international prices in negotiations.
US ARE PAYING MORE AND MORE
A study by the nonprofit RAND Corp that looked at prescription drug prices in 2022 found that U.S. health plans pay more than three times as much (link) for brand-name drugs, even after estimated discounts.
Studies have shown that the faster introduction of new and more expensive drugs is driving up prices in the US, while other high-income countries that directly bear the cost of health care are imposing tighter prescription restrictions. (link)
The U.S. willingness to pay more for drugs also contributes to lower prices overseas, said Richard Frank, director of the Brookings Institution’s Center on Health Policy.
“If you have one of your buyers willing to cover your sunk costs and some of your ongoing costs, selling larger quantities to others, even at lower prices, can still be profitable,” he said.
In some cases, lower-cost generic or biosimilar versions of the original brand-name drugs are already available outside the U.S. For example, generic versions of Merck’s Januvia have been on the market in Canada since late 2022, while the U.S. patents for the diabetes drug run until 2026.
Once patent protection on a brand-name drug expires and copycat products enter the market, prices drop dramatically. However, drug manufacturers are often able to extend U.S. patent protection by making small changes to things like dosage or formulation.
For one of the most expensive drugs in the negotiations, Amgen’s Enbrel, which was first approved for rheumatoid arthritis in 1998, there is still no biosimilar competition in the US. The US courts have upheld Amgen’s patents (link) and blocked biosimilars until 2029.
In other countries, several options already exist. The Swedish price for a 30-day supply of an Enbrel biosimilar is $709, compared to the Medicare renegotiated price of $2,355.
Because most drugmakers raise prices in the U.S. annually, “the longer a drug is on the U.S. market, the more we pay,” said Mariana Socal, a research fellow at the Johns Hopkins Bloomberg School of Public Health, noting that prices in other countries typically fall over time.
An analysis by the Brookings Institution (link) showed that Medicare negotiations provided the greatest benefit for drugs with little competition in the market. It found that three drugs – Enbrel, Bristol Myers’ blood thinner Eliquis and Pfizer 
PFE and the Crohn’s disease drug Stelara from Johnson & Johnson 
JNJ – will account for more than half of the $6 billion in savings expected by Medicare.
Even for those drugs that do not face generic competition outside the United States, other governments have set lower prices.
The maximum price Medicare can pay for AstraZeneca’s diabetes drug Farxiga 
AZN is willing to pay is $179 for a 30-day supply. The Swedish maximum price for the standard 30-day dose of Farxiga is $35, and the price in Canada is about $60.
Each year, more drugs will be subject to price negotiations by Medicare, which accounts for about one-third of drug spending in the United States.
“We’ll see the U.S. push into the market so that the U.S. pays something that strikes a better balance between affordability, innovation and incentives,” Brookings’ Frank said.
