How to Reduce Drug Prices

Section 1: Top 35 Countries with the Lowest Drug Prices

Source: RAND Corporation / ASPE (U.S. Department of Health and Human Services), International Prescription Drug Price Comparisons, 2022 data (published February 2024). Data Year: 2022.

Rank of the United States: The United States does not appear among the 35 countries with the lowest drug prices because U.S. drug prices are the highest among all Organisation for Economic Co-operation and Development (OECD) nations. According to 2022 RAND/ASPE data, U.S. prices across all prescription drugs were 278% of the average prices in 33 OECD comparison countries, meaning Americans pay $2.78 for every $1.00 paid in other high-income countries. For brand-name drugs, U.S. prices were 422% of comparison-country prices.

The United States ranks last among all OECD nations in prescription drug affordability. The primary reasons for this disparity include:

(1) the absence of government price negotiation authority until the limited Medicare Drug Price Negotiation Program enacted under the Inflation Reduction Act of 2022;

(2) strong patent protections that delay generic competition;

(3) the dominant influence of pharmaceutical lobbying on legislative and regulatory policy;

(4) a fragmented, multi-payer insurance system that prevents unified bargaining power; and

(5) the unique U.S. market structure that allows manufacturers to set launch prices without regulatory approval. In 2024, data from the Peterson-KFF Health System Tracker showed that Medicare negotiated prices for the first 10 high-expenditure drugs were still on average 2.8 times higher than prices achieved by comparable nations.

References and Data Sources:

RAND/ASPE International Prescription Drug Price Comparisons (2022): (pmc.ncbi.nlm.nih.gov)

ASPE International Prescription Drug Price Comparisons Report (PDF): (aspe.hhs.gov)

Peterson-KFF Health System Tracker: Medicare Negotiated Drug Prices vs. Other Countries: (www.healthsystemtracker.org)

OECD Pharmaceutical Spending Data via Statista: (www.statista.com)

Drug Prices by World Region (Sorted by Region, Increasing Order)

Section 2: What Other Countries Have Done to Decrease Their Lowest Drug Prices

The 8 Top Rated Countries with the Lowest Drug Prices

Türkiye (Turkey)

Türkiye achieves among the lowest drug prices globally through a robust Reference Pricing System administered by the Türkiye Medicines and Medical Devices Agency (TITCK). Under this system, drug prices are benchmarked against the lowest prices in a basket of reference countries, including République française, España, Italia, Elláda, Portugal, and others.

The government mandates that no drug may be priced higher than 66% of the lowest reference country price.

Türkiye's Social Security Institution (SGK) negotiates directly with pharmaceutical companies for drugs covered under the national formulary.

The Pharmaceutical Law No. 6197 and implementing regulations set strict frameworks for pricing, reimbursement, and market authorization. Generic substitution is mandatory at the pharmacy level, with pharmacists required to dispense the lowest-cost bioequivalent.

The Ministry of Health (www.saglik.gov.tr) and TITCK (www.titck.gov.tr) jointly oversee the system.

Price reductions of 10-40% are periodically mandated for drugs that have been on the market for more than ten years.

România (Romania)

România employs a National Health Insurance House (CNAS, www.cnas.ro) reimbursement framework that tightly controls drug prices through international reference pricing.

The National Agency for Medicines and Medical Devices (ANMDMR, www.anm.ro) approves and monitors pharmaceutical prices, requiring companies to submit comparative price data from 12 European Union member states.

România mandates price cuts when reference country prices decline and uses a positive reimbursement list (compensated drugs list) to restrict coverage.

The Ministry of Health (www.ms.ro) sets margins for wholesalers and pharmacies, preventing markup inflation.

Quarterly price revisions are required by law, with automatic reduction triggers when any reference country lowers its price.

The country has also implemented co-payment systems to incentivize patients toward generic medications, which account for a large share of dispensed prescriptions.

Polska (Poland)

www.gov.pl/web/zdrowiePolska's drug pricing regime is governed by the Act on Reimbursement of Medicines, Foodstuffs for Particular Nutritional Purposes, and Medical Devices (Reimbursement Act of 2011), administered by the Ministry of Health ().

Drugs eligible for reimbursement undergo an economic evaluation by the Agency for Health Technology Assessment and Tariff System (AOTMiT, www.aotmit.gov.pl), which produces cost-effectiveness and budget-impact analyses.

The National Health Fund (NFZ, www.nfz.gov.pl) negotiates reimbursement prices through formal agreements with manufacturers.

Polska applies a reference pricing mechanism tied to the lowest prices in EU countries, with mandatory price reductions when European benchmarks fall. Fixed official pharmacy margins and wholesale margins prevent price escalation at the distribution level.

Generic drugs receive expedited reimbursement approval and are prioritized in prescribing guidelines.

Magyarország (Hungary)

Magyarország's pharmaceutical pricing system is overseen by the National Institute of Pharmacy and

www.neak.gov.huNutrition (OGYEI, www.ogyei.gov.hu) and the National Health Insurance Fund (NEAK, ).

Drug reimbursement prices are determined through a formal submission and negotiation process requiring comparative data from EU member states.

Magyarország applies a dynamic reference pricing framework that triggers automatic price adjustments when reference country prices change.

The Medicines Act and Government Decree 32/2004 establish detailed pricing and reimbursement rules, including step-therapy requirements that mandate patients try lower-cost drugs before accessing more expensive alternatives.

Magyarország has also implemented risk-sharing agreements with manufacturers for high-cost treatments, where manufacturers refund the state if drugs underperform versus clinical expectations.

Pharmacy-level generic substitution is mandatory, with financial incentives for dispensing the lowest-priced generic.

Česko (Czech Republic)

The Česko regulates drug prices through the State Institute for Drug Control (SUKL, www.sukl.cz), which administers the national formulary and reimbursement list.

Under the Act on Public Health Insurance, all reimbursed drugs could undergo a health technology assessment before receiving a maximum reimbursable price.

The Ministry of Health (www.mzcr.cz) sets maximum price limits using a basket of reference countries, ensuring Czech prices do not exceed the lowest prices found across the EU reference basket.

The General Health Insurance Company (VZP, www.vzp.cz) and other health insurers negotiate supplemental discounts and rebates with manufacturers.

Generic drugs are fast-tracked and receive higher reimbursement rates relative to brand-name drugs, actively incentivizing prescribers and patients to choose generics.

Quarterly price reviews and mandatory disclosure of manufacturer transaction prices keep the system updated and transparent.

Elláda (Greece)

Elláda manages drug costs through the National Organization for Medicines (EOF, www.eof.gr) and the National Organization for Health Care Services Provision (EOPYY, www.eopyy.gov.gr). Drug prices are set using a 15-country European reference pricing model, and Elláda uses one of the most competitive reference baskets in the EU. In response to its fiscal crisis, Elláda enacted Law 3816/2010 and subsequent measures implementing mandatory price reductions, clawback mechanisms, and rebate systems.

The clawback system requires manufacturers to refund the state when pharmaceutical expenditures exceed predetermined budget targets.

The Positive List of Reimbursable Medicines is continuously updated by the Ministry of Health (www.moh.gov.gr) and reviewed by independent pharmaceutical advisory committees.

Hospital drug procurement is conducted through centralized tender processes that achieve additional volume-based price reductions.

Elláda mandates prescribing by International Nonproprietary Name (INN), promoting generic use and preventing brand-name-only prescriptions.

Portugal

www.sns.gov.ptPortugal's pharmaceutical pricing is administered by Infarmed - National Authority of Medicines and Health Products (www.infarmed.pt) under the Ministry of Health ().

Portugal applies a reference pricing system that sets reimbursement prices at the level of the third-lowest price among comparable products within therapeutic reference groups.

Manufacturers seeking reimbursement could provide pharmacoeconomic evidence and undergo a mandatory health technology assessment.

The National Health Service (SNS) uses centralized procurement and framework contracts for hospital drugs, achieving significant volume discounts.

Portugal implemented payback and clawback mechanisms under the Health Sustainability Pact, requiring manufacturers to compensate the state when spending exceeds budget caps.

Generic prescribing is promoted through INN-based prescription requirements and incentive schemes for physicians.

The country introduced a Drug Price Monitoring System that tracks real-time price changes across the European reference basket.

Italia (Italy)

www.aifa.gov.itItalia's pharmaceutical pricing and reimbursement framework is administered by the Italian Medicines Agency (AIFA, ).

Drug prices for reimbursed products are negotiated directly between AIFA and manufacturers, with negotiations guided by pharmacoeconomic evidence and comparative effectiveness data. Italia applies European external reference pricing to benchmark drug costs.

A system of managed entry agreements, including payment-by-results, cost-sharing, risk-sharing, and capping contracts, is used for innovative or high-cost therapies.

The Ministry of Economy and Finance (www.mef.gov.it) sets overall pharmaceutical expenditure ceilings for the National Health Service (SSN), with automatic payback mechanisms triggered when spending exceeds caps.

AIFA maintains separate expenditure ceilings for territorial (outpatient) and hospital drugs.

Italia employs a therapeutic reference pricing system that establishes reimbursement ceilings for groups of therapeutically equivalent drugs, with patients paying the difference if they choose a higher-priced product.

Generic prescribing is encouraged through automatic substitution rules and physician prescribing guidelines.

Section 3: What the U.S. Could Do to Decrease Its Drug Prices

The United States can decrease drug prices through a comprehensive, multi-pronged strategy encompassing government action, legislative reform, private sector accountability, and public engagement. The following describes in detail what government agencies, government officials, corporations, organizations, and private individuals could do.

Government Agency Actions:

The Centers for Medicare and Medicaid Services (CMS, www.cms.gov) could aggressively expand the Medicare Drug Price Negotiation Program established under the Inflation Reduction Act of 2022, increasing the number of drugs eligible for negotiation each year and lowering the thresholds for eligibility based on market exclusivity periods.

CMS could develop transparent negotiation methodologies incorporating comparative effectiveness research, clinical outcome data, and international reference prices.

The Food and Drug Administration (FDA, www.fda.gov) could accelerate the approval of generic and biosimilar drugs by streamlining the Abbreviated New Drug Application (ANDA) process, resolving backlog applications, and issuing guidance that clarifies interchangeability standards for complex biologics.

The FDA could expand its Purple Book and Orange Book to ensure prescribers and patients can easily identify lower-cost equivalents.

The Federal Trade Commission (FTC, www.ftc.gov) could actively investigate and prosecute anti-competitive practices including pay-for-delay agreements, product hopping, and exclusionary patent strategies that prevent generic market entry.

The Department of Veterans Affairs (VA, www.va.gov) model of negotiated formulary pricing could be adopted as a benchmark and template for broader government purchasing programs.

The Department of Health and Human Services (HHS, www.hhs.gov) could publish an annual international drug price comparison report, create a pharmaceutical price transparency portal, and coordinate interagency efforts to reduce drug costs.

Government Official Actions:

Members of Congress could enact legislation establishing a national drug price negotiation authority with binding authority covering all federal programs, not just Medicare.

Congress could reform patent laws to limit the practice of evergreening, whereby manufacturers obtain multiple sequential patents on minor drug modifications to extend market exclusivity far beyond the original 20-year patent term.

Legislation could mandate price transparency at every level of the supply chain, including manufacturer list prices, wholesale acquisition costs, pharmacy benefit manager (PBM) rebates, and net prices. Congress could close the non-interference clause that, prior to the Inflation Reduction Act, prevented Medicare from negotiating drug prices.

The President could use executive authority to invoke march-in rights under the Bayh-Dole Act to authorize generic production of federally funded drug discoveries when prices are deemed unreasonable, and could direct HHS to import drugs from Canada and other countries under Section 804 of the Federal Food, Drug, and Cosmetic Act.

State governors and attorneys general could enforce state-level drug price transparency laws, prosecute fraudulent pricing practices, and participate in multi-state drug purchasing compacts to leverage collective bargaining power.

Corporate and Industry Actions:

Pharmaceutical manufacturers could adopt voluntary price caps for essential medicines and commit to pricing based on comparative effectiveness rather than market monopoly leverage.

Corporations could end the practice of paying generic manufacturers to delay market entry (pay-for-delay agreements), which have been shown to cost consumers billions annually.

Pharmacy benefit managers (PBMs) could be required to pass through drug rebates directly to patients at the point of sale rather than retaining them as profit, and could be subject to full transparency reporting requirements.

Hospitals and health systems could participate in group purchasing organizations (GPOs) that negotiate lower drug costs, adopt formulary management practices that prioritize cost-effective generics and biosimilars, and report pharmaceutical expenditure data to enable price benchmarking.

Health insurance companies could redesign benefit structures to reduce patient cost-sharing for essential medications, ensuring that high-deductible plans do not price patients out of life-saving drugs.

Private Organizations and Advocacy Groups:

Organizations such as the National Academy for State Health Policy (www.nashp.org), AARP (www.aarp.org), Families USA (www.familiesusa.org), and the Commonwealth Fund (www.commonwealthfund.org) could continue advocating for drug pricing reform through public education, legislative lobbying, and policy research.

The Institute for Clinical and Economic Review (ICER, www.icer.org) could expand its drug price assessments and make findings more directly actionable in federal and state reimbursement decisions.

Academic medical centers and research universities could advocate for reform of the Bayh-Dole Act's march-in rights to prevent excessive pricing of taxpayer-funded drug discoveries.

Private Citizen and Consumer Actions:

Private individuals could engage in civic action by contacting elected representatives, supporting drug pricing reform legislation, and participating in public comment periods for FDA and CMS rulemaking.

Patients could use price comparison tools such as GoodRx (www.goodrx.com), NeedyMeds (www.needymeds.org), and the Medicare Plan Finder to identify lower-cost drug options.

Consumer advocacy groups could organize campaigns demanding pharmaceutical price transparency and accountability. Individuals could request generic or biosimilar substitutions from prescribers and pharmacists whenever clinically appropriate.

Section 4: References

References for Section 2 and Section 3:

RAND/ASPE International Prescription Drug Price Comparisons, 2022: (pmc.ncbi.nlm.nih.gov)

ASPE HHS International Prescription Drug Price Comparisons Report: (aspe.hhs.gov)

Peterson-KFF Health System Tracker: Drug Price Comparisons: (www.healthsystemtracker.org)

Turkish Medicines and Medical Devices Agency (TITCK): (www.titck.gov.tr)

Turkish Ministry of Health: (www.saglik.gov.tr)

Turkish Social Security Institution (SGK): (www.sgk.gov.tr)

Romanian National Agency for Medicines (ANMDMR): (www.anm.ro)

Romanian National Health Insurance House (CNAS): (www.cnas.ro)

Romanian Ministry of Health: (www.ms.ro)

Polish Ministry of Health: (www.gov.pl)

Polish Agency for Health Technology Assessment (AOTMiT): (www.aotmit.gov.pl)

Polish National Health Fund (NFZ): (www.nfz.gov.pl)

Hungarian National Institute of Pharmacy (OGYEI): (www.ogyei.gov.hu)

Hungarian National Health Insurance Fund (NEAK): (www.neak.gov.hu)

Czech State Institute for Drug Control (SUKL): (www.sukl.cz)

Czech Ministry of Health: (www.mzcr.cz)

Czech General Health Insurance Company (VZP): (www.vzp.cz)

Greek National Organization for Medicines (EOF): (www.eof.gr)

Greek National Organization for Health Care Services (EOPYY): (www.eopyy.gov.gr)

Greek Ministry of Health: (www.moh.gov.gr)

Portuguese Infarmed - National Authority of Medicines: (www.infarmed.pt)

Portuguese National Health Service (SNS): (www.sns.gov.pt)

Italian Medicines Agency (AIFA): (www.aifa.gov.it)

Italian Ministry of Economy and Finance: (www.mef.gov.it)

U.S. Centers for Medicare and Medicaid Services (CMS): (www.cms.gov)

U.S. Food and Drug Administration (FDA): (www.fda.gov)

U.S. Federal Trade Commission (FTC): (www.ftc.gov)

U.S. Department of Veterans Affairs (VA): (www.va.gov)

U.S. Department of Health and Human Services (HHS): (www.hhs.gov)

AARP: (www.aarp.org)

Families USA: (www.familiesusa.org)

Commonwealth Fund: (www.commonwealthfund.org)

National Academy for State Health Policy (NASHP): (www.nashp.org)

Institute for Clinical and Economic Review (ICER): (www.icer.org)

GoodRx Drug Price Comparison Tool: (www.goodrx.com)

NeedyMeds Patient Assistance Programs: (www.needymeds.org)

Section 5: U.S. Organizations Advocating to Improve Drug Pricing

Section 6: Individuals Advocating to Improve Drug Pricing

Frequently Asked Questions

How much more do Americans pay for prescription drugs compared to other countries?

According to 2022 RAND/ASPE data, U.S. drug prices are 278% of the average prices in 33 OECD comparison countries, meaning Americans pay $2.78 for every $1.00 paid in other high-income nations. For brand-name drugs specifically, U.S. prices are 422% of comparison-country prices.

Why are prescription drug prices so high in the United States?

The U.S. lacks comprehensive government price negotiation authority, has strong patent protections that delay generic competition, and allows manufacturers to set launch prices without regulatory approval. A fragmented multi-payer insurance system also prevents unified bargaining power, and pharmaceutical lobbying significantly influences legislative and regulatory policy.

Has the U.S. government done anything to lower drug prices?

The Inflation Reduction Act of 2022 created a limited Medicare Drug Price Negotiation Program, which negotiated prices for the first 10 high-expenditure drugs. However, 2024 Peterson-KFF data shows those negotiated prices are still on average 2.8 times higher than prices achieved by comparable nations.

How does Turkey keep prescription drug prices so low?

Turkey uses a Reference Pricing System that benchmarks drug prices against the lowest prices in a basket of reference countries, mandating no drug may be priced above 66% of the lowest reference country price. The Social Security Institution (SGK) also negotiates directly with pharmaceutical companies, and mandatory generic substitution at pharmacies further drives down costs.

What is international reference pricing and how does it reduce drug costs?

International reference pricing is a system where a country sets the maximum allowed price for a drug based on the prices paid in a selected basket of other countries, often anchored to the lowest prices found. This forces pharmaceutical manufacturers to compete downward on price rather than setting prices unilaterally, and it is used effectively by countries like Turkey and Romania.

Where does the United States rank globally in prescription drug affordability?

The United States ranks last among all Organisation for Economic Co-operation and Development (OECD) nations in prescription drug affordability. U.S. prices are the highest among all Organisation for Economic Co-operation and Development (OECD) countries, with Americans paying significantly more than residents of every other high-income nation for the same medications.

About the Author

Ronald Bonfilio has devoted his career to public service spanning more than five decades. His service began with the U.S. Army from 1966 to 1968, where he conducted medical laboratory research at Fort Detrick and at the Walter Reed Army Institute of Research. He subsequently held a distinguished series of federal positions, including roles with the National Cancer Institute, the National Institutes of Health, the U.S. Agency for International Development (Vietnam), the Special Inspector General for Iraq Reconstruction, and the U.S. State Department (Iraq), where he served as a Senior Economic Advisor and Agricultural Advisor. He also served 15 years with the U.S. Government Accountability Office as a Program Analyst and Auditor.

Ronald Bonfilio holds a degree in Economics from the University of Maryland, and degrees in Chemistry and a Master of Business Administration from the University of Massachusetts. He is a former Certified Public Accountant.