Americans paid $98 billion out-of-pocket for prescription drugs in 2024, more per person than any comparable wealthy nation, for the same medications made by the same manufacturers. A 2024 RAND Corporation study found U.S. drug prices are 2.78 times higher than prices in comparable countries. For brand-name drugs, the gap is 3.22 times, even after adjusting for U.S. rebates. Roughly 43% of Americans reported skipping medication as prescribed in the past year because they could not afford it.
The 2.78 Multiplier and Who Pays It
The same insulin that costs approximately $3 to manufacture and under $30 in Canada sells for hundreds of dollars in the United States. The Inflation Reduction Act of 2022 capped insulin cost-sharing at $35 per month for Medicare enrollees, dropping the average out-of-pocket cost from $50.87 in 2019 to $21.98 in 2023. The cap covers only Medicare. Americans without Medicare, comprehensive insurance, or any coverage remain fully exposed to list prices no peer country permits.
More than one-quarter of new prescriptions written in 2024 went unfilled, mostly because insurers refused to cover them. In a 2025 national survey of nearly 20,000 U.S. adults, roughly 82 million Americans reported making trade-offs between daily living expenses and healthcare costs. The people most harmed are not Medicare enrollees, who received partial protection. They are working-age adults with inadequate private coverage or no coverage at all.
Congress has had the RAND data since at least 2021. The problem is not a lack of information. Price negotiation was blocked for Medicare until 2022, and the block was intentional: drug manufacturers lobbied against it for decades. When the IRA finally authorized negotiation, the industry sued. The courts rejected most of those challenges. The program moved forward.
"U.S. prices across all drugs were nearly 2.78 times as high as prices in comparison countries. For brand drugs, the gap reached 3.22 times, even after adjusting for estimated U.S. rebates." RAND Corporation, February 2024
Medicare Negotiation Worked. Then Came the Loophole.
The IRA's Medicare Drug Price Negotiation Program produced real results. The first 10 Part D drugs negotiated received price cuts of at least 38% below their 2023 list prices, taking effect January 1, 2026. The Centers for Medicare and Medicaid Services estimated those 10 drugs alone would save Medicare $6 billion per year and save beneficiaries $1.5 billion annually in out-of-pocket costs. A Peterson-KFF analysis confirmed the program is working, while also noting that even after negotiation, every comparable country still pays less, and in nearly half of cases Medicare's negotiated prices remain more than three times the prices charged in peer nations.
On July 4, 2025, President Trump signed the "One Big Beautiful Bill Act" into law. Buried in the reconciliation package was the ORPHAN Cures Act, which expanded the orphan-drug exception to Medicare's negotiation program. Under the change, drugs could escape price negotiation by claiming rare-disease designations even when they had large commercial markets. Analysts at Harvard Law School's Petrie-Flom Center estimated the provision handed $5 billion to the pharmaceutical industry, with patients and taxpayers paying higher costs for drugs that would otherwise have been subject to negotiation.
The pharmaceutical sector recorded an average annual net income margin of 23.2% from 2017 through 2024, exceeding the highest single-year margin of any other major industry sector by a factor of four, according to the Campaign for Sustainable Rx Pricing. The ORPHAN loophole protects the most profitable slice of that business from the only federal mechanism Congress created to contain it.
What a Regulated Pharmaceutical Market Looks Like
Canada, Germany, France, Japan, and Australia all regulate drug prices through negotiated formularies, reference pricing, or cost-effectiveness review bodies. None of those systems eliminated pharmaceutical innovation. The U.S. leads the world in pharmaceutical R&D spending and in per-patient drug expenditure, and it trails peer nations in life expectancy and in the share of citizens who can access the medications they are prescribed. Spending more for less reflects what happens when a single buyer, the patient, negotiates alone against a monopoly seller.
A balanced pharmaceutical market requires price regulation on one side and genuine patent protection and R&D incentives on the other. Every peer country maintains both. The argument that any price regulation kills innovation has been tested against 40 years of data from Canada, Germany, and France, none of which has seen its pharmaceutical sector collapse. What those countries have seen is lower rates of prescription abandonment and fewer deaths from unaffordable medication.
The IRA demonstrated that negotiation works, even at the modest scale Congress authorized. The negotiated prices for 2026 represent the first structural check on pharmaceutical pricing in U.S. history. The $5 billion ORPHAN loophole, signed on July 4, is the legislature's immediate response to its own first meaningful reform. The direction of that response makes clear whose priorities are being served.
Sources
- RAND Corporation: Prescription Drug Prices in the U.S. Are 2.78 Times Those in Other Countries (February 2024)
- Peterson-KFF Health System Tracker: How Medicare Negotiated Drug Prices Compare to Other Countries
- IQVIA Institute via NJ Consumer Affairs: Understanding Medicine Use and Expenditure in the U.S. (2025)
- CMS: Medicare Drug Price Negotiation Program, Negotiated Prices for 2026
- Harvard Law Petrie-Flom Center: Small Provision in the One Big Beautiful Bill (October 2025)
- GoodRx Research: A Third of Americans Don't Fill Prescriptions Due to Cost
- KFF: The Facts About the $35 Insulin Copay Cap in Medicare
- Campaign for Sustainable Rx Pricing: Pharmaceutical Industry Profit Margins Still 10 Times Greater Than Other Sectors
- Gallup: One-Third of Americans Cut Back to Cover Healthcare Expenses (2025)
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