US drug price 3.9 times higher than in Korea

Most Favored Nation tariff pressures rise

OECD 2.8 times higher... Japan 3.5 times, Germany 2.9 times, the UK 2.7 times, etc.

President Trump pushed to set the US’s drug price to the lowest level of major advanced countries

With the US government pushing forward the introduction of a Most Favored Nation (MFN) policy to lower drug prices, an analysis has revealed that US drug prices are 3.9 times higher than those in South Korea.

 

The Korea Biotechnology Industry Organization cited an analysis by the US public policy research institute Rand Corporation on the 4th on this finding.

 

The data was released in February 2024 and is based on drug prices in 33 OECD countries, including the United States.

 

According to the data, the overall drug price level in the United States is 2.8 times higher than the average of 32 OECD countries.

 

Compared to South Korea, it is 3.9 times higher.

 

In other words, drug prices in South Korea are equivalent to 25.6% of those in the United States.

 

In addition, US drug prices are 3.5 times higher than Japan’s, 3.3 times higher than France’s, 2.9 times higher than Germany’s, and 2.7 times higher than the United Kingdom’s.

 

Among OECD countries, Turkey has the largest price disparity, with prices 10.3 times higher than those in the United States.

 

Also, a significant price difference was observed between brand-name (original) drugs and generic drugs.

 

The price of brand-name drugs was 4.2 times higher in the US than the OECD average.

 

In particular, the top 60 drugs in terms of sales in the US are 5.0 times higher than the OECD average.

 

Among brand-name drugs, biopharmaceuticals are 3.6 times higher than the OECD average.

 

On the other hand, the price of generic drugs in the US is lower – around 66.8% of the OECD average.

 

The US President Donald Trump has been strengthening trade pressure on pharmaceuticals by imposing tariffs and most-favored-nation (MFN) policies.

 

While announcing plans to impose tariffs on pharmaceuticals, he is also targeting drug prices in other countries as a means of exerting trade pressure.

 

As part of this effort, President Trump signed an executive order in May to lower prescription drug prices in the U.S.

 

to the lowest prices among major developed countries (MFN).

 

The main point of the order is to compare drug prices in OECD countries with a per capita GDP of 60% or more than that of the US, and lower US drug prices to the lowest among them.

 

The most-favored-nation treatment policy applies only to products that do not have biosimilars or generics.

 

The US Department of Health and Human Services plans to first encourage pharmaceutical companies to voluntarily lower drug prices and then force them to do so.

 

If the policy is fully implemented, the prices of new drugs entering the US market are expected to be set lower than those in other countries, such as the EU and Canada.

 

It is speculated that this may automatically lower the prices of domestic pharmaceutical companies' drugs in the US.

 

In particular, new drug development companies are expected to be affected.

 

If drug prices in the US drop to European or Canadian levels, pharmaceutical companies' expected sales are likely to decrease, and the value of their new drug licenses is expected to decline.

 

On the other hand, biosimilars and generics are not expected to be directly affected, as the policy targets products without existing biosimilars or generics.

 

However, these products may still face pressure on profitability in the future.

 

If the prices of original drugs decrease, the benchmark prices for generics and biosimilars could also decline, reducing sales incentives.