If you’ve ever opened a prescription bottle in the U.S. and stared at the price tag, you’re not alone. A month’s supply of a common diabetes drug can cost $500. A life-saving cancer treatment? $10,000. And yet, the exact same pill, made in the same factory, costs a fraction of that in Canada, Germany, or the UK. Why does this happen? It’s not about quality. It’s not about science. It’s about a system designed to let drug companies charge whatever they want - and no one steps in to stop them.
The System Was Built to Let Prices Soar
In 2003, Congress passed the Medicare Modernization Act. It created Medicare Part D, the prescription drug benefit for seniors. Sounds good, right? But there was a catch: the law banned Medicare from negotiating drug prices with manufacturers. That’s not how it works anywhere else in the developed world. In the UK, Canada, or France, the government sits down with drugmakers and says, ‘This is what we’re willing to pay.’ In the U.S., Medicare has to take whatever price the company sets. That single decision turned the U.S. into the world’s biggest drug market - and the most expensive.
Today, Americans pay more than three times what other OECD countries pay for the same brand-name drugs. The White House confirmed this in late 2025: the U.S. accounts for less than 5% of the global population but generates 75% of the world’s pharmaceutical profits. That’s not a coincidence. It’s a design flaw.
Who’s Really in Charge? The Middlemen
Here’s where it gets even stranger. You don’t pay the drug company directly. You pay a middleman - and there are layers of them. Pharmacy Benefit Managers, or PBMs, are supposed to be the negotiators. They’re hired by insurers to get discounts. But over time, they’ve become powerful corporations that own pharmacies, manage mail-order services, and even have stakes in drug manufacturers. Their profit? It’s tied to the list price of drugs - not what you actually pay.
So here’s the trick: PBMs make more money when the list price goes up. Why? Because their rebate is a percentage of that high price. That means they have a financial incentive to push drugs with higher list prices, even if they’re not the best or cheapest option. The result? A system that rewards inflation, not affordability.
Take Galzin, a drug used to treat Wilson’s disease. In the U.S., it costs $88,800 a year. In the UK? $1,400. In Germany? $2,800. The pill is identical. The factory is the same. But because of how the rebate system works, the U.S. system rewards the highest possible price - not the lowest.
The New ‘Solutions’ That Don’t Fix Much
In 2022, Congress passed the Inflation Reduction Act. It was supposed to change things. And it did - a little. Starting in 2026, Medicare can negotiate prices for 10 drugs a year. That’s it. Ten. Out of thousands. And even then, the 2025 budget bill weakened the program, cutting its potential savings by billions.
There’s also a new rule: if a drug’s price rises faster than inflation, the company has to pay a rebate to Medicare. That helped lower costs for 64 drugs in early 2025. But it doesn’t touch the biggest problem - the list price itself. And it doesn’t help people who don’t have Medicare.
Then there’s the White House’s ‘Most-Favored-Nation’ idea - paying the same price as other countries. Sounds fair. But when President Trump sent letters to drugmakers in July 2025 asking them to lower prices, 87 drugs still went up - by an average of 8%. The system doesn’t respond to pleas. It responds to profit.
Specialty Drugs Are Breaking the Bank
The biggest price spikes aren’t coming from aspirin or antibiotics. They’re coming from specialty drugs - the ones for diabetes, obesity, cancer, and rare diseases. These are complex, high-tech medications. Yes, they cost a lot to develop. But that doesn’t justify what’s happening.
Take Ozempic and Wegovy, drugs for weight loss and diabetes. In 2025, after public pressure, the price dropped from $1,000 and $1,350 a month to $350. That’s a win. But here’s the catch: it only happened because of political pressure, not policy. The same drugs still cost $350 in the U.S. and $70 in Germany. The company didn’t lower the price because it had to. They lowered it because they were being watched.
IQVIA reports that specialty drugs drove an 11.4% increase in U.S. drug spending in 2024 - up from 4.9% the year before. And they’re expected to keep rising. These drugs are designed for small patient groups, so companies charge more to recoup costs. But in the U.S., there’s no cap. No limit. No accountability.
Real People Are Choosing Between Food and Medicine
Behind every number is a person. In 2025, 1.5 million Medicare beneficiaries were spending so much on prescriptions that they had to ration pills - skip doses, cut them in half, or go without. One woman in Ohio told a reporter she was taking half her insulin dose because she couldn’t afford the full amount. She’s not alone.
The Inflation Reduction Act’s $2,000 annual out-of-pocket cap for Medicare Part D is a lifeline. For many, it’s the first time in years they won’t have to choose between paying for their medication and buying groceries. But that cap only applies to Medicare. For millions of working-age Americans with private insurance, there’s no such protection. Deductibles can hit $7,000 a year. Coinsurance can be 40% or more.
And if Project 2025’s prescription drug plan becomes law, that cap could disappear. The Center for American Progress warns that up to 18.5 million seniors and disabled people could end up paying more. That’s not reform. That’s a step backward.
Why Can’t We Just Copy Other Countries?
Other countries use simple tools: direct negotiation, price caps, reference pricing. Germany looks at what other nations pay and sets its own price based on that. Canada does the same. Even Japan, a high-tech economy, keeps drug prices low through strict oversight.
In the U.S., the argument against this is always the same: ‘We fund global innovation.’ But the data doesn’t back it up. The U.S. spends more on drugs, yes - but we don’t get more new drugs. We get the same drugs, just priced higher. And the profits? They’re mostly reinvested in marketing, not research. A 2025 study found that pharmaceutical companies spend twice as much on advertising and executive pay as they do on R&D.
Senator Bernie Sanders has pushed the Prescription Drug Price Relief Act since 2025. It would tie U.S. prices to what other wealthy nations pay. It’s not radical. It’s common sense. But the drug lobby spends hundreds of millions a year fighting it. In 2025, they spent more lobbying Congress than any other industry.
What’s Next?
The system isn’t broken - it’s working exactly as designed. The question is: who is it designed for? Not patients. Not taxpayers. Not even doctors. It’s designed for shareholders.
There are small victories. Ten drugs are now being negotiated. Prices for a few have dropped. Transparency rules are coming - eventually. But without a fundamental shift - without letting Medicare negotiate, without breaking the PBM monopoly, without capping prices based on international benchmarks - nothing will change for most people.
The U.S. is the only rich country where you can go bankrupt because you need medicine. That’s not a market failure. It’s a policy failure. And it’s one we’ve chosen - again and again - for over 20 years.