Why Prescription Drug Prices Are So High in the United States

Why do Americans pay three times more for the same pills than people in Canada, Germany, or the UK? It’s not because our drugs are better. It’s not because they’re made here. It’s because the system is built to let drug companies charge whatever they want - and no one has the power to stop them.

The System Was Designed This Way

In 2003, Congress passed the Medicare Modernization Act. It created Medicare Part D, the prescription drug benefit for seniors. But there was a catch: the law forbade Medicare from negotiating drug prices directly with manufacturers. That made the U.S. the only developed country in the world where the government can’t bargain for lower drug costs. Other nations - like the UK, France, and Australia - use their buying power to set fair prices. The U.S. doesn’t. Instead, it lets drugmakers set list prices, then lets middlemen negotiate discounts behind closed doors.

That’s not an accident. It was a deliberate choice. The pharmaceutical industry spent over $300 million lobbying Congress that year. Their argument? If the government negotiates prices, innovation will slow. But the data tells a different story. The U.S. accounts for less than 5% of the world’s population - yet generates 75% of global pharmaceutical profits. That means Americans are subsidizing drug research for the rest of the world.

Who’s Really in Charge? The Hidden Players

You might think your pharmacy, your insurer, or your doctor sets your drug price. But the real power lies with Pharmacy Benefit Managers - or PBMs. These are giant corporations like CVS Caremark, Express Scripts, and OptumRx. Originally, they were supposed to be middlemen who negotiated discounts for insurers. Now, they own pharmacies, insurance plans, and even drug manufacturers. Their business model? Maximize rebates, not lower prices.

Here’s how it works: A drug company sets a list price of $1,000. The PBM demands a 40% rebate - so the company pays $400 back. But the list price stays at $1,000. That means your copay - often based on the list price - is still $100 or $200. Meanwhile, the PBM keeps part of that rebate. The patient pays more. The insurer pays more. The drugmaker still makes a profit. And no one sees the full picture.

This isn’t just theory. A 2025 analysis by Morgan Lewis showed that PBMs profit more when list prices go up. That’s why drugs like insulin, Ozempic, and Galzin keep rising in price - even when production costs don’t change.

The Galzin Example: A $88,800 Pill

One drug that shows the absurdity of this system is Galzin - a treatment for Wilson’s disease, a rare genetic disorder. In the U.S., it costs $88,800 a year. In the United Kingdom? $1,400. In Germany? $2,800. That’s not a difference in quality. It’s the same pill, made in the same factory, shipped in the same box. But in the U.S., there’s no price control. No negotiation. No limit.

Patients on Galzin often ration their doses. Some skip days. Some sell their pills. Others go without. This isn’t rare. According to Senator Bernie Sanders’ 2025 report, 688 prescription drugs increased in price since 2017 - even as politicians promised to fix it. The White House claims progress. But the numbers don’t lie. In 2024, net drug prices rose 11.4% - up from 4.9% the year before. The biggest drivers? New obesity and diabetes drugs. Drugs like Wegovy and Ozempic. Drugs that cost $1,350 a month in the U.S., but $350 in other countries after recent deals.

The Inflation Reduction Act: A Start - But Not Enough

In 2022, Congress passed the Inflation Reduction Act. It was the first real attempt to bring down drug prices. Starting in 2026, Medicare can negotiate prices for 10 high-cost drugs. By 2029, that number will rise to 20. So far, it’s working. HHS announced in January 2025 that 64 drugs had lower prices because manufacturers had to pay rebates when they raised prices faster than inflation.

But here’s the catch: Only 10 drugs are covered in 2026. That’s less than 0.1% of all prescription drugs on the market. And the 2025 budget reconciliation bill weakened the program, adding loopholes that could increase Medicare spending by $5 billion. Meanwhile, drugmakers are already preparing for the next round of price hikes. They’re pushing new drugs into the market - ones that cost $100,000 a year and aren’t yet eligible for negotiation.

Why Don’t Other Countries Have This Problem?

Countries like Canada and Germany use reference pricing. They look at what other nations pay for the same drug - and cap their own prices at that level. Japan negotiates prices annually. The UK’s National Health Service has a single buyer for all drugs. They don’t have PBMs. No rebates. No list prices. Just one fair price.

The U.S. system is the outlier. It’s not broken - it’s working exactly as designed. The design? Profit over affordability. The result? One in four Americans says they’ve skipped a dose, cut a pill in half, or gone without a prescription because they couldn’t afford it. That’s not a personal failure. That’s a policy failure.

What’s Next? The Battle Over Project 2025

The fight isn’t over. The conservative Project 2025 plan proposes cutting Medicare drug benefits, eliminating the inflation rebate, and allowing PBMs to keep more of their rebates. According to the Center for American Progress, this would raise costs for 18.5 million seniors and people with disabilities.

Meanwhile, Senator Sanders’ Prescription Drug Price Relief Act - introduced in May 2025 - would cap U.S. drug prices at the average of what they cost in Canada, the UK, Germany, France, and Japan. It’s simple. It’s fair. And it’s been blocked in Congress since day one.

Drug companies argue that high prices fund innovation. But the numbers show otherwise. In 2024, the top 10 pharmaceutical companies spent $35 billion on R&D - and $58 billion on marketing and profits. That’s 66% more on advertising than on research. Meanwhile, patients are dying because they can’t afford their insulin.

The Human Cost

CMS Administrator Chiquita Brooks-LaSure said the $2,000 annual out-of-pocket cap for Medicare Part D - starting in 2025 - will be “life-changing.” But that cap doesn’t help people under 65. It doesn’t help the 40 million Americans without insurance. It doesn’t help those on high-deductible plans who pay full list price before their deductible is met.

Real people are making real choices. A diabetic in Ohio chooses between insulin and her child’s school supplies. A cancer patient in Texas skips doses to stretch his supply. A veteran in Florida pays $1,200 for his thyroid medication - the same pill that costs $180 in Mexico.

This isn’t about politics. It’s about survival. And the system is rigged to make sure the companies that make the drugs - not the people who need them - come out ahead.