Americans pay over $1,200 per person each year for prescription medications—more than double what other developed nations spend—because of a profit-driven system that inflates prices through middlemen and weak regulations.
At a Glance
- U.S. residents spent $1,218 per person on prescription drugs in 2022
- Comparable developed nations pay less than $500 per person annually
- Trump’s “most favored nation” order sought to align U.S. drug prices with international norms
- Pharmacy benefit managers (PBMs) inflate drug costs through complex pricing schemes
- Drug companies invest more in marketing than research, while defending high prices in the name of innovation
The World’s Most Expensive Pills
America leads the world in prescription drug costs, with the average U.S. consumer spending $1,218 annually on medications in 2022—far outpacing citizens in Australia, Spain, or Norway, where yearly totals hover around $400 to $500. According to a report from the Kaiser Family Foundation, these inflated costs are not due to superior drugs or better outcomes but are the result of a fragmented and opaque pricing system.
Countries with centralized healthcare systems negotiate directly with pharmaceutical manufacturers to set national drug prices. The U.S., by contrast, allows a web of insurers, manufacturers, and pharmacy benefit managers to determine costs—resulting in skyrocketing consumer prices.
The Middlemen Behind the Markups
Pharmacy benefit managers (PBMs) are often touted as price negotiators, but in reality, they function more like hidden profiteers, adding complexity and cost. PBMs insert themselves between patients, drug companies, and pharmacies, striking secret rebate deals and steering patients toward expensive brand-name drugs—even when cheaper generics are available.
These middlemen rake in billions while keeping pricing structures opaque. The result is a system where patients and doctors alike rarely understand the true cost of medication. In many OECD countries, such practices are tightly regulated or banned outright—yet in the U.S., they thrive in the shadows.
Watch a report: How Middlemen Inflate U.S. Drug Prices.
Innovation or Exploitation?
In 2020, President Donald Trump attempted to disrupt this profit-driven model by signing a “most favored nation” executive order, which aimed to peg U.S. drug prices to those paid by countries like Germany and Japan. The move, while controversial, recognized a simple economic truth: Americans shouldn’t pay six times more than Canadians for the same drug.
Pharmaceutical companies pushed back, claiming that price caps would stifle innovation. But multiple analyses have shown that these firms spend more on marketing and executive compensation than on developing new drugs. In fact, many breakthroughs are born from taxpayer-funded research, only to be privatized and sold back to those taxpayers at exorbitant prices.
Patent manipulation is another key driver of high prices. U.S. drugmakers extend monopolies through minor chemical tweaks and aggressive litigation, blocking cheaper generics and maintaining profit margins for decades.
Toward a Fairer System
Real reform will require more than executive orders. Lawmakers must enact legislation to regulate PBMs, reform patent laws, and empower Medicare to negotiate directly with drug manufacturers—just as governments do in most developed nations.
Until that happens, Americans will continue to shoulder the world’s highest drug costs, while pharmaceutical giants report record profits. This isn’t a market failure—it’s a policy failure, and it has deadly consequences.
