Summary

Drug manufacturers charge 60 percent more for 77 commonly prescribed, brand-name drugs in the United States than for the same medications in the United Kingdom. A total of 66 of the drugs were priced higher in the United States than in the United Kingdom; 47 of these were priced more than twice as high. Most of the differences in prescription drug prices between countries cannot be attributed to differences in manufacturers' costs. Instead, U.S.-U.K. drug price differences are mainly due to the lack of regulatory constraints in the United States. In the United Kingdom, the government health system--virtually the sole payer for prescription drugs--has an agreement with drug manufacturers that limits the profits that drug companies can earn on sales in the British Isles. Other factors may also work to lower drug prices in the U.K. Pharmaceutical information is more widely available in the United Kingdom than in the United States, possibly enhancing price competition among drug manufacturers in the United Kingdom. U.K. doctors receive information on their own prescribing patterns and on the comparative prices and efficacy of drugs. The government can remove drugs from its list of reimbursable products if the manufacturers' prices for those drugs are considered excessive. Wholesalers and retailers can import brand-name drugs into the United Kingdom from elsewhere in Europe where drugs are cheaper.

GAO found that: (1) drug manufacturers typically charge more for prescription drugs in the United States than in the United Kingdom; (2) price differentials tend to be dramatically smaller for newer medicines and for single-source drugs; (3) differences between U.S. and U.K. drug prices are primarily due to the regulatory constraints that manufacturers face in the United Kingdom; (4) pharmaceutical information is more widely available in the United Kingdom than in the United States; and (5) although government regulation has restrained drug prices in the United Kingdom, the implications for similar intervention in the U.S. pharmaceutical market are unclear.