One reason is the ability of pharmaceutical companies to extend or create new patents in the United States - many of which are not actually for new drugs. For example, on average the United States pays 2.5 times more than France does for all drugs.

A 2021 study by the RAND Corporation, a nonprofit research organization, found that the cost of brand-name drugs in the United States was more than triple the cost of those same drugs in other developed countries. The United States has the highest total spending on prescription drugs out of all the countries that belong to the Organization for Economic Cooperation and Development (OECD), an organization comprised of 38 countries that works together to find solutions to common challenges and promote better economic policies. The United States spends nearly three times the average of other developed countries per capita on healthcare, which is partly due to high drug costs. Spending on Prescription Drugs is Higher in the U.S. The Inflation Reduction Act, signed into law in 2022, contains a number of provisions aimed at combatting the rising costs of prescription drugs for the federal government, including allowing Medicare to negotiate some pricing.

In fact, about one-third of retail prescription drug spending is attributable to Medicare. A particularly fast-growing portion of healthcare spending goes to prescription drugs, much of it covered by the federal government. Healthcare spending in the United States accounts for a sizable share of the economy and continues to grow rapidly.

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