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Practicing pharmacists per 100,000 population, 2021: 94
Community pharmacies per 100,000 population, 2021: 20
Expenditure on retail pharmaceuticals per capita, USD PPP, 2021
– Prescription medicines: $1,139
– Over-the-counter medicines: $293
– Total: $1,432
Expenditure on retail pharmaceuticals by type of financing, 2021:
– Government/compulsory schemes: 69%
– Voluntary health insurance schemes: 1%
– Out-of-pocket spending: 30%

Source: OECD (2023), Health at a Glance 2023: OECD Indicators, OECD Publishing, Paris, doi.org/10.1787/7a7afb35-en.

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“CMS [Centers for Medicare and Medicaid Services] estimates retail spending on prescription drugs at 9.2% of NHE [National Health Expenditures] in 2018 and projects that this share will fall to 9.0% by 2028. We estimate that nonretail drug spending accounted for an additional 4.5% of NHE in 2018, growing to 4.9% by 2028. Total drug spending will grow from 13.7% to 13.9% of NHE, from about $500 billion in 2018 to $863 billion in 2028. The retail component is projected to grow from $335 billion to $560 billion and the nonretail component from $165 billion to $302 billion.

“These projections do not reflect coronavirus disease 2019 (COVID-19) effects. Estimates through October 2020 indicate sustained retail drug spending growth with spending on health care services falling sharply and recovering slowly. Accordingly, our projection of nonretail drug spending in 2020 is likely overstated, as much of the nonretail drug growth occurs in clinic settings inhibited by the pandemic.⁵ It is too soon to know whether permanent COVID-19–related changes will affect the 10-year projections.”

Source: Rena M. Conti, Ani Turner, Paul Hughes-Cromwick. Projections of US Prescription Drug Spending and Key Policy Implications. JAMA Health Forum 2(1):e201613 (2021) dx.doi.org/10.1001/jamahealthforum.2020.1613

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“Between 2014 and 2018, mean list prices of 32 insulin products increased by 40.1% (from $19.60 to $27.45), while mean net prices received by manufacturers decreased by 30.8% (from $10.53 to $7.29). Net expenditures per 100 units of insulin increased by 3.2% (from $15.11 to $15.59) while the share of a hypothetical $100 insulin expenditure accruing to manufacturers decreased by 33.0% (from $69.71 to $46.73) and the share accruing to health plans decreased by 24.7% (from $13.82 to $10.40). The share of insulin expenditures retained by pharmacy benefit managers increased by 154.6% (from $5.64 to $14.36), the share retained by pharmacies increased by 228.8% (from $6.21 to $20.42), and the share retained by wholesalers increased by 74.7% (from $4.63 to $8.09).”

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“Although expenditures per 100 units of insulin changed little, their composition changed notably during this period. Figure 3 depicts the distribution of a hypothetical $100 in net expenditures on insulin across manufacturers and other distribution system participants each year. The shares of manufacturers and insurers have decreased between 2014 and 2018, from $69.71 to $46.73 (−33.0%) for manufacturers, and from $13.82 to $10.40 (−24.7%) for insurers. In contrast, the amount retained by wholesalers, pharmacies, and PBMs has increased notably over that period, from $4.63 to $8.09 (74.7%) for wholesalers, from $6.21 to $20.42 (228.8%) for pharmacies, and from $5.64 to $14.36 (154.6%) for PBMs. Overall, the share of a hypothetical $100 insulin expenditure that accrued to manufacturers decreased such that by 2018 more than half of expenditures on insulin flowed to distribution system intermediaries. eFigure 1 in the Supplement presents results of the same analysis per 100 mL of insulin, that is, without normalizing dollars spent. Subcategory analysis of long-acting vs non–long-acting insulins and vials vs pens is presented in eFigure 2 in the Supplement and shows similar trends.”

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“Because insurance covers very high shares of the point-of-service price for the most expensive drugs to avoid exposing patients to excessive financial risk, a large portion of patient OOP spending was for drugs with moderate prices (eg, second and third quartile) and not just for drugs with high (eg, top quartile) point-of-service prices. The OOP prices increased 43.9% from 2015 to 2017, a period when the increase in net drug prices was stable.⁶

“The limitations of this cross-sectional study include that we cannot observe whether patient cost sharing is offset by coupons or copay assistance, and we cannot distinguish between when patients pay consistent OOP prices and when patients pay higher OOP prices at first and then reach their out-of-pocket maximum. Because the point-of-service price does not include rebates, our measure of patient share understates the fraction of drug cost (eg, net price) paid by patients. These findings may not be generalizable outside Massachusetts, where health insurance may be more comprehensive.

“The findings of this study suggest that a policy to reduce the highest drug prices may lead to lower total spending and lower health insurance premiums, but it may not necessarily address the high OOP prices paid by many patients. Monitoring and slowing the increase in OOP spending will be important to improve patient affordability and access to prescription medications.”

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“The U.S. spent $457 billion in 2016 on combined retail (dispensed at the pharmacy) and non-retail (dispensed in physician offices) drugs.^{26 27} Medicare alone spent nearly $130 billion on prescription drugs that year, $99.5 billion of which was for Part D pharmacy drugs and $29.1 billion of which was for Part B physician-administered drugs.²⁸ In total, 30 percent of Medicare spending went to prescription drug costs in 2016.²⁹ As Figure 1 shows, U.S. spending on prescription drugs has been rising precipitously during the time that Medicare has been paying for drugs under Part D. Projections indicate this spending will only continue to increase.

“There is a direct and positive relationship between the cost of drugs and drug spending. Between 2012 and 2016, drug spending grew by 27 percent for individuals with employer-sponsored health insurance; at the same time, drug prices increased by almost 25 percent (and utilization only increased by about two percent during that time).³¹

“The introduction of new types of drugs into the market is one driving factor of these increases in spending. For example, in 2014 and 2015, prescription drug spending increased rapidly because of the new high-cost hepatitis C drugs that came to market.³² Drugs are most expensive when they are first introduced to market, before there is competition of other drugs in their class, and before the original patent expires and generics become available.³³“

Source: “A Painful Pill To Swallow: US vs International Prescription Drug Prices,” US House Ways and Means Committee, Sept. 2019.

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“The U.S. pays the most for drugs, though prices varied widely. Across the 79 drugs in our sample, the average list price per dose was $152.92, ranging from $0.08⁶ to $16,597.⁷ Annual pharmaceutical spending per capita varied from $318 in Denmark to $1,220 in the United States. Average annual per capita spending on pharmaceuticals was $675.25 across the 12 countries, $625.73 excluding the U.S. U.S. drug prices are on average outliers relative to all comparator countries. Most countries had average drug prices around 24 to 30 percent of those in the United States. The greatest disparity was with Japan, where the average drug price was only 15 percent that of the U.S., meaning that the U.S. on average spends seven times what Japan pays for the same drugs. Denmark represented the closest average price, where average drug prices were 39.1 percent of the average U.S. drug price.”

Source: “A Painful Pill To Swallow: US vs International Prescription Drug Prices,” US House Ways and Means Committee, Sept. 2019.

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“U.S. drug prices were nearly four times higher than average prices compared to similar countries. We found that individual drug prices in the U.S. ranged from 708 to 4,833 percent9 higher than the combined mean price in the other 11 countries. On average, U.S. drug prices were 3.7 times higher than the combined average of the other 11 countries in the study.”

Source: “A Painful Pill To Swallow: US vs International Prescription Drug Prices,” US House Ways and Means Committee, Sept. 2019.

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“U.S. consumers pay significantly more for drugs than in other nations, even when accounting for rebates. One of the major arguments from the pharmaceutical industry justifying these international price differentials is that while list prices are much higher in the U.S., the rebates offered are also significantly higher, so the net price is comparable. To test this claim, we compared rebate rates in the U.S. to Germany and found German rebate rates are relatively low compared to U.S. rebates, ranging from 0 to 35 percent and averaging 8.7 percent. U.S. rebates would need to average 67 percent to match average German net prices, and the average U.S. rebate rate would need to be about 73.3 percent in order for U.S. net prices to match list prices in the other 11 countries in the study. According to the Congressional Budget Office (CBO) the average rebate rate for band [sic] name drugs was 22 percent in 2015.¹⁰“

Source: “A Painful Pill To Swallow: US vs International Prescription Drug Prices,” US House Ways and Means Committee, Sept. 2019.

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“Spread,” or the differential between drug acquisition costs billed to the payer versus paid by the PBM [Pharmacy Benefits Manager] to the dispensing pharmacy, came to public attention in 2018 after what one industry observer described as “the audit that changed everything,” which documented a total of $224.8 million in spread paid by Ohio Medicaid in a 1-year period.^79,80 The resulting concerns about spread prompted a federal investigation launched in April 2019 and similar investigations in other states, including Kentucky, Massachusetts, and Florida.^79,81–83 In Massachusetts, spread for the top 20 generic drugs ranged from $107-$2,350 per prescription, and managed care organization (MCO) cost exceeded fee-for-service payments by $15.97 per drug overall and by ≥ $50 for 9.9% of drugs (top 5 mean cost increases: $525-$1,134).⁸² These findings suggest that even when spread arrangements are declared in contracts, they represent financial misalignment between PBM and payer interests because total costs may far exceed what would otherwise have been paid for equivalent dispensing services.

“A second controversial practice was highlighted in the report on Florida Medicaid, which produced little evidence of spread but a concerning finding that PBMs looking to “transition away from spread pricing without sacrificing profitability” may have found alternative revenue-enhancement mechanisms.⁸³ These included shifting of managed care prescription volume to the state’s 5 largest specialty pharmacies, which together collected 28% of available managed Medicaid prescription drug profit despite dispensing only 0.4% of claims in 2018.⁸³ For the state’s top 5 specialty pharmacies, all owned by MCOs or PBMs, per-claim profit on managed Medicaid was $79-$207 compared with $2-$4 in retail pharmacies.⁸³ Such arrangements create inherent misalignment between the payer’s financial interest, selection of the most cost-effective dispensing site, and that of a PBM that owns a specialty pharmacy.

“Rebates paid from pharmaceutical manufacturers to PBMs in exchange for formulary inclusion may be one of the clearest manifestations of misalignment, even in 100% rebate passthrough arrangements, because the price differential between rebated products and lower-cost alternatives may far exceed revenues returned to the payer. For example, a branded ibuprofen-famotidine combination costing approximately $2,600 per claim is included in the formulary of at least 1 large PBM, which has a multimillion dollar rebate arrangement with the manufacturer, although both ingredients are available as generic products for a total of < $20.^84–89 Similar concerns have been raised about topical diclofenac and combination naproxen-esomeprazole, priced at approximately $1,500 and $2,200, respectively, for a 30-day supply, and included on some PBM formularies, sometimes with utilization management restrictions (e.g., prior authorization [PA], quantity limits).^86,90,91

“With few exceptions, biosimilar uptake among PBMs has been slow.^23,92,93 Formulary decisions on brand drugs, sometimes touted as innovative cost-saving measures, are often unrelated to clinical value and may be implemented for products without any available comparative evidence of clinical or cost-effectiveness, suggesting that rebates influence them.^4,5,94

“Because these arrangements incentivize greater utilization and higher-cost drugs, PA use may be lax. Audits conducted by Archimedes, a firm with which we are affiliated, commonly reveal high-cost, clinically inappropriate utilization, similar to the patterns described in peer-reviewed research described previously, in paid claims that underwent PA (examples in Table 2, Box B).^95,96 Investigation of these uses, coupled with medical reviews conducted by board-certified specialists, revealed that physician offices sometimes attested in the PBM’s PA process to clinical criteria not supported by the medical record. With few exceptions, specialty drug PA denial rates or outcomes are rarely reported, and stakeholder organizations have identified a need for reform around increased transparency and evaluation of these programs.^97–99 Similarly, although contracting innovations (e.g., value-based coverage, long-term payment plans) may prove to be beneficial, no outcomes for these programs have been reported, even in organizational arrangements ostensibly centered around transparency.^20,100“

Motheral BR, Fairman KA. Changes in PBM Business Practices in 2019: True Innovation or More of the Same? J Manag Care Spec Pharm. 2020;26(10):1325-1333. doi:10.18553/jmcp.2020.20213

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World Health Systems Facts is a project of the Real Reporting Foundation. We provide reliable statistics and other data from authoritative sources regarding health systems and policies in the US and sixteen other nations.

Page last updated November 18, 2023 by Doug McVay, Editor.