How to Make Prescription Drug Prices Equitable for Americans

A while back, I was discussing the inequity of drug prices for Americans versus Canadians, Europeans, etc. It is obvious that Americans pay more for brand name prescription drugs than other nations. However, many people don't realize that Americans pay less for generics than in other countries. This is really a function of the size of the buyers and the amount of pressure that is levied by the government.



Other countries have socialized health care, meaning that there is a single buyer for all of the drugs for every person in the country. In the U.S., it is mostly private health care, or government programs for the less fortunate. Unfortunately, the powers that be in the U.S. are either too scared, too lazy or too disorganized to use their collective buying power to lower the price of prescription drugs in the same manner as they have for generic drugs. Let me make this straight: THE U.S. SUBSIDIZES THE REST OF THE WORLD FOR PRESCRIPTION DRUGS. Pharmaceutical companies collect profits in the U.S. to offset lower profits or losses in the rest of their markets.

A friend of mine had an idea about how to solve this issue. Using the graph above, it is clear that the prices are higher in the U.S., so big pharmaceutical buyers can simply state, we want all countries to have an equal price (based on absolute $, or PPP, or whatever). This would lower the U.S. cost by around 20%, but raise other countries costs by almost 2x. It would realign the issue, and force other countries to pay their fair share for drugs. Basically, realigning around maybe 1.20 on the chart.

It would suck for everyone else, but basically the U.S. is paying for everyone else's socialized medicine, instead of paying for its own people.