A recent Statista article examines the disparity in prescription drug spending across countries. The Organisation for Economic Co-operation and Development (OECD) ranks the United States highest in average spending, at $1,218 per resident – over $200 more than second-place Germany. On May 12, President Donald Trump signed an executive order directing the Department of Commerce to take measures to bring U.S. drug spending in line with other developed nations.
“The May 12 order suggests that the U.S. will present drugmakers with maximum prices they can charge for their medications, based on a so-called ‘most favored nations’ approach, i.e., prices comparable to what other rich nations charge,” the article states.
The article notes that pharmaceutical companies have long objected to U.S. price caps, arguing that high domestic drug prices fund future innovation. However, evidence shows that much of their spending goes toward executive salaries, marketing, and stock buybacks rather than research and development.
In addition, high U.S. drug prices are driven by strong patent protections that delay the availability of generics, and by insufficient oversight of pharmacy benefit managers (PBMs). These intermediaries in the drug supply chain often prioritize profits over cost savings, favoring more expensive medications and collecting fees from manufacturers – despite claiming to reduce costs through negotiation.