Giving Compass' Take:

• Aaron S. Kesselheim reviews the origins of high prescription drug prices in the United States, as well as various policy mechanisms that can lead to more rational spending. 

• How can funders and impact investors work to reduce the cost of prescription drugs? Should the government work to reduce prescription drug costs?

• Learn how partnerships can work to reduce prescription drug costs. 


This essay is part of Vision 2020: Evidence for a stronger economy, a compilation of 21 essays presenting innovative, evidence-based, and concrete ideas to shape the 2020 policy debate. The authors in the new book include preeminent economists, political scientists, and sociologists who use cutting-edge research methods to answer some of the thorniest economic questions facing policymakers today. Topics range from economic inequality, race, and mobility, to competition, wages, taxes, macroeconomics, and family economic security.

To read more about the Vision 2020 book and download the full collection of essays, click here.

Prescription drugs are among the most effective and cost-effective interventions in medicine, and the drug industry plays an important role in bringing these products to market, which can require substantial resources. Yet drug prices in the United States continue to rise without a direct connection to the costs of development, which can make breakthroughs unaffordable for many patients, leading to bad clinical consequences.

Rising drug prices also are a major driver of U.S. healthcare spending, now accounting for about one-fifth of overall spending, with one private insurer reporting that 25 percent of healthcare dollars are going to prescription drugs.1 The United States spent about $476 billion on prescription drugs in 2018.2 This is an increase of about $100 billion as compared to $361 billion in spending in 2014,3 with the discovery and testing of new drugs accounting for additional tens of billions of taxpayer and private dollars.

Read the full article about improving competition to lower U.S. prescription drug costs by Aaron S. Kesselheim at Washington Center for Equitable Growth.