Why are drugs so expensive in the US? – The world

In the middle of May, the White House presented a strategy for drastic reduction of drug prices for American consumers. The goal is to prize prescription drugs decreased by up to 90 percent.

« Although now only four percent of the world’s population, the pharmaceutical companies achieve more than two thirds of their profit in America, » said Saddonald Tramp president when signing the decrees.

« We subsidize the health care of others, who pay only a part of what we pay for, » the president said, inviting explicitly on « socialist health systems » like that in Germany.

The Ministry of Health has received 30 days to define specific objectives, based on that, the government plans to start negotiations with the pharmaceutical industry.

The American government consumes more hundreds of billions of dollars per recipe through Medicare health program, which includes almost 70 million Americans older than 65 years and chronically ill.

The Ministry of Health should – wherever possible – to enable the direct sales of American consumers at the lowest prices in the world. Also, the drug agency (FDA) should examine the opportunities to allow imports from additional industrial countries in the future. According to the White House, the restriction of exports is considered.

Customs and drugs?

Although drugs are exempt from Tramp’s customs package, the US government currently conducts an investigation into it. For the German PHARMACIOUS industry, the United States represent the most important export market: 2024 in the United States exported pharmaceutical products worth 27 billion euros – therefore almost a quarter of this type of export.

On the other hand, Germany is 2024. From the United States, he imported pharmaceutical products worth 12.1 billion euros – which makes up almost 17 percent of imports in that branch, as well as over 12 percent of raw materials and drug semi-finished products.

Consumers in the US pay three-four times more for medicine

It is long known that prescription drug prices are really significantly more than in other countries. According to the recent American Trust Report of the Brain Rand Corporation, the prices in the United States are 2.78 times more than in 33 other OECD member states. Compared to German, American consumers pay as much as 2.94 times more for medicines.

In branded drugs, the differences in prices between the United States and other countries is also more pronounced: Americans pay 4.22 times more than citizens in comparable countries.

That is why it is not surprising, according to the NGO Kaiser Family Foundation (KFF), 28 percent of Americans states that they are « somewhat difficult » or « very difficult » to pay the drugs that the doctor prescribed. This percentage grows at 37 percent in those who take four or more prescription drugs.

A special drastic example of high drugs in the United States is insulin – a hormone that regulates the level of blood sugar and which is necessary for diabetics. According to a Rand study from 2022. Insulin in the United States costs almost seven times more than in Germany.

Central formation of drug prices in Germany

How come the prices of drugs in Germany is so lower compared to those in the United States? In Germany, there is a centralized, state regulated mechanism for the formation of drug prices – especially when it comes to prescription drugs.

The manufacturer may determine the initial price, ie during the first year after the introduction to the market, received a full price.

However, after the new drug enters itself, the assessment of its benefits – by the Joint Federal Board (G-BA) who form a federal association working with health insurance, the Federal Association of Dentists, the German Association of Hospitals and the Federal Association of Mandatory Health Insurance.

G-BA decides which medical services – medicines, diagnostic examinations and treatments – covers compulsory health insurance. So, he is a kind of « most deciding body » when it comes to health care for about 73-74 million people who are insured through compulsory health insurance.

Based on this assessment, the drug manufacturer and the Federal Association of Mandatory Health Insurance in Germany negotiate during one year about the price that the insurance will be refunded, which is then valid for all 94 compulsory health insurance in the country.

If the pricing negotiations fail, the final decision is made by the arbitration commission.

Pharmaceutical firms in the United States have almost quite plotted hands

Negotiations with pharmaceutical companies are conducted by individual actors – primarily insurance companies and – so-called Pharmacy Benefit Managers (PBM), companies operating as mediators between health insurance, manufacturers of drugs and pharmacies, and covering about 70 percent of secured persons in the United States.

Such poorly structured pricing negotiations provide pharmaceutical companies to largely determine prices largely. This leads to huge differences in prices and often very high costs that patients in the United States have to cover from their own pocket.

A great role of generic drugs in Germany

In addition, in Germany, the use of generics that are usually significantly cheaper – therefore copies of the original preparations appear on the market only when patent protection of the original manufacturer expires.

Health insurance in Germany determine the reference price for a group of drugs with the same active ingredient – usually based on the price of one or more cheaper generics. The same categories with fixed prices include the so-called « ME-TOO » drugs – with a small degree of innovation. Compared to the already existing drug, they have no or only minimal therapeutic differences – but they are still protected by patent.