| Hello John, If you asked anyone about prescription drug prices in the United States versus those in other industrialized nations, most people would say that Americans pay more for drugs than people in those other countries.
And when it comes to new, patented drugs, that’s true.
But that’s not the whole story: A new study by our friend Tomas Philipson found that when it comes to generic drugs — off-patent drugs subject to competition — the situation is quite different. In fact, Americans are better off than people in other countries.
New, brand-name drugs are often pricey because they have patents — temporary monopolies granted by the government. A patent ensures that the company that made the drug can recoup the enormous cost that goes in to bringing a new drug to market. It is also a key reason why the American pharmaceutical industry is the most innovative and advanced in the world. 💊 The truth is, America actually leads on generic drug prices.
Philipson examined both brand-name and generic drugs across six developed countries: the United States, Canada, Germany, the United Kingdom, France, and Japan. He found that the United States has “both a higher share of generic prescriptions and lower generic prices than other countries.”
Generics make up a much larger portion of the U.S. market (93%), and generic drugs in peer countries cost around twice as much as those in the United States.
The result?
As the study notes: “U.S. public-sector [Medicare and Medicaid] prescription net prices are 18% lower on average than those in the peer countries. This challenges the common viewpoint that the U.S. drug prices are universally higher.” This is a big deal.
In America, generic drugs are much less expensive than generics sold in other countries. And they represent the vast majority of the drugs we Americans use. The claim that American consumers are being “ripped off” by foreign governments is greatly exaggerated.
🚀 Want to expand America’s drug innovation to new heights? Well, government regulations and price controls aren’t the answer ...
These important new findings should give pause to proponents of government price controls for prescription drugs. We do not need price fixing to reduce drug costs. Price controls stifle lifesaving innovation and cause harmful shortages, ultimately driving drug prices higher. Going down that road would imperil Americans’ access to breakthrough treatments and our ability to get the latest medicines before the rest of the world. Breakthroughs don’t come cheap: It takes 10 to 15 years and $2.6 billion on average to bring a new drug to market. This creates an unavoidable tradeoff between profitability and innovation. - Allowing the government to set drug prices would only further stifle innovation.
- Instead of price controls, Washington should promote competition and end the red tape that makes drugs more expensive, which is an integral part of our Personal Option health care proposal.
The Personal Option contains policies like a streamlined drug approval process to reduce development costs, expanded availability of tax-free health savings accounts that give patients more control, and the removal of needless barriers to lower-cost generics. Here are other ways that the Personal Option would specifically bring down drug prices for all Americans: - Boost the number of drugs available over the counter without a doctor’s prescription.
- Streamline FDA drug approvals to give patients and doctors more options without sacrificing safety.
- Repeal rules that grant drug companies undeserved patent extensions that keep medicine prices high.
- Repeal existing government price controls and resist new ones.
You can help promote the Personal Option by signing our Personal Option Petition. When you do, you’ll join millions of Americans advocating for a transparent, patient-first health care system that works for people. | 
