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What’s Driving U.S. Health Spending? Not Prescription Medicines.

Jacy Gomez
October 1, 2020

It’s no secret that the United States spends more on health care than other nations. In response to this problem, policymakers in Washington – including President Trump and Speaker Nancy Pelosi – want to impose foreign price setting schemes on prescription medicines that America’s patients rely on.

Foreign price setting is a reckless plan that would chill critical medical innovation and make it harder for patients to access cutting-edge therapies, as we’ve previously warned

More than that, however, government price setting ignores the root causes of America’s costly and growing health care burden. In fact, new data from a Peterson-Kaiser study reveals the true driving forces of U.S. health care spending.

Consider that our nation spent $10,637 per capita on health care in 2018. Comparable countries, including Canada, France, Germany, and the United Kingdom, spent $5,527 per capita on health care that same year – half of the United States’ total.

The main driver of this cost discrepancy? According to the Peterson-Kaiser study:

  • Expenses related to inpatient and outpatient care. More than 76 percent of the per capita cost contribution difference between the United States and comparable nations can be chalked up to money spent at hospitals and other outpatient facilities.
  • Prescription drug costs, by contrast, play a much smaller role in the equation. According to the Peterson-Kaiser study, prescription drugs comprise just 10 percent of the cost difference between the United States and comparable nations.

And for further proof that drug prices aren’t driving overall health spending, consider data from the IQVIA Institute, which notes that “real net per capita spending [on prescription drugs] per year grew by only $44 since 2009.” And this is during a time in which hundreds of innovative medicines that fight and cure disease have been brought to market.

The bottom line: We need to ensure medicines are affordable for patients, but government price setting will do more harm than good. Pushing these policies on patients is irresponsible. Americans won’t experience real relief from growing health spending until we address the heart of the problem.

Check out the full Peterson-Kaiser Tracker here.

Learn more about the dangers of foreign price setting here.