International Generic Drug Prices: How U.S. Costs Compare Globally

When you walk into a pharmacy in the U.S. and see a $6 bottle of generic lisinopril, it’s easy to think you’re getting a bargain. But here’s the twist: you are getting a bargain-compared to almost every other developed country. While Americans pay some of the highest prices in the world for brand-name drugs, the opposite is true for generics. In fact, U.S. generic drug prices are 33% lower than the average in 33 other wealthy nations, according to a 2022 RAND Corporation study for the U.S. Department of Health and Human Services.

Why U.S. Generic Drugs Are Cheaper

The reason is simple: competition. In the U.S., when a brand-name drug loses patent protection, dozens of companies rush to make copies. The FDA approved 773 generic drugs in 2023 alone. Each new competitor drives prices down. When just one or two generics enter the market, prices drop to about 35-40% of the brand’s original price. With three or more, they crash to 15-20%. That’s why a 30-day supply of generic metformin can cost as little as $4 at Walmart, and why 93% of all generic prescriptions in the U.S. cost under $20.

Compare that to countries like France or Japan, where governments tightly control prices and often limit the number of generic manufacturers allowed to sell. Fewer competitors mean slower price drops. In Canada, even after generics enter, prices stay higher because the system doesn’t encourage the same level of price wars. In the U.S., it’s a race to the bottom-and consumers win.

The Brand-Name Problem

But here’s the catch: generics make up 90% of prescriptions in the U.S., but they account for only about 20% of total drug spending. The other 80%? That’s all brand-name drugs-and those are where the U.S. pays the most in the world.

A 2023 report from the Office of the Assistant Secretary for Planning and Evaluation found that U.S. brand-name drug prices are more than four times higher than in other OECD countries. For example, the diabetes drug Jardiance costs $204 per month under Medicare’s negotiated price, while the same drug sells for just $52 on average in 11 other countries. Stelara, a psoriasis treatment, costs $4,490 in the U.S. versus $2,822 abroad.

Why? Because the U.S. doesn’t negotiate prices like other countries do. In Germany, France, and Japan, the government sets a maximum price before a drug even hits the market. In the U.S., drugmakers set their own list prices, and insurers and pharmacy benefit managers (PBMs) negotiate discounts behind closed doors. That’s why the list price in the U.S. is 2.78 times higher than the global average-but the net price after rebates is actually 18% lower than in Canada, the U.K., and Germany, according to a 2024 University of Chicago study.

How Medicare’s New Negotiations Change the Game

Starting in 2022, Medicare gained the legal right to negotiate prices for the most expensive drugs. The first 10 drugs selected included Jardiance, Stelara, and Farxiga. The negotiated prices were a big win for taxpayers-but they still lag behind international benchmarks. In nine out of the ten cases, every other country on the list paid less than Medicare did.

This isn’t because Medicare is weak. It’s because the U.S. system is built differently. Other countries set prices before launch. Medicare negotiates after the drug has already been on the market for years, often after brand-name companies have already recouped their R&D costs and made massive profits. That means Medicare is bargaining from a weaker position.

Still, the results matter. The 10 negotiated drugs are expected to save Medicare Part D $14 billion over the next decade. And more drugs are coming. By February 2025, another 15 drugs will be selected for negotiation. If this program expands, it could start closing the gap-especially if the U.S. starts using international prices as a benchmark, as some lawmakers are pushing for.

Why Other Countries Pay Less

It’s not magic. It’s policy. In France, the government sets a single price for each drug, generic or brand. In Japan, the Ministry of Health reviews prices every two years and cuts them if they’re too high. In the U.K., the NHS has a national formulary and refuses to pay for drugs that don’t offer good value.

These systems are designed to control costs from the top down. The U.S. system is designed to let the market decide-which means prices can skyrocket if there’s no competition. That’s why you’ll sometimes see a generic drug suddenly jump in price: because one manufacturer stopped making it, and the remaining few raised prices. The FDA has documented cases where a generic drug had only one supplier-and the price doubled overnight.

That’s why the number of manufacturers matters more than the country. A generic drug made by six U.S. companies will be cheaper than one made by two companies in Germany-even if the German company is state-subsidized.

What This Means for You

If you take mostly generic medications, you’re already paying less than people in most other rich countries. A 30-day supply of generic atorvastatin (Lipitor) costs $12 in the U.S. versus $45 in Canada and $68 in Germany. Generic insulin? $25 in the U.S. under the Inflation Reduction Act, compared to $120 in the U.K. and $200 in Australia.

But if you’re on a brand-name drug-especially for cancer, autoimmune disease, or rare conditions-you’re paying a premium. The U.S. is essentially subsidizing global drug innovation. Drugmakers argue that high U.S. prices fund research for new medicines. Critics say other countries are free-riding. The truth? Both are right. The U.S. pays more so that new drugs get developed. But the system doesn’t always reward that fairly.

The Future of Drug Pricing

The big question is whether the U.S. will start aligning its prices with the rest of the world. Some experts, like Dr. Dana Goldman from USC, argue that the U.S. already has the best generic system on the planet. Others, like RAND’s Andrew Mulcahy, warn that the brand-name pricing crisis is getting worse.

New policy tools are emerging. The FDA is accelerating generic approvals. Medicare is negotiating. And in 2025, a new executive order pressured Pfizer to cut prices by selling directly to consumers-raising fears that drugmakers might raise prices overseas to make up for lost U.S. profits.

One thing is clear: the gap between U.S. generic prices and global prices isn’t an accident. It’s the result of market structure, regulation, and competition. And for the 90% of Americans who take generics, that’s a good thing. For the 10% who rely on expensive brand drugs? That’s where the real fight is.

How to Save on Medications Right Now

- Always ask for the generic. Even if your doctor prescribes a brand, you can request the generic version. It’s the same drug, just cheaper.

- Use pharmacy discount cards. GoodRx, SingleCare, and Blink Health often offer prices lower than insurance copays for generics.

- Check mail-order pharmacies. Many insurers offer 90-day supplies at lower prices. A 90-day supply of metformin can cost under $10.

- Know your Medicare options. If you’re on Medicare Part D, compare plans annually. The cheapest plan one year might not be the best the next.

- Ask about patient assistance programs. Most brand-name drugmakers offer free or low-cost programs for low-income patients.

The bottom line? You’re already paying less for generics than most of the world. But if you’re on a brand-name drug, you’re not alone-and you have options.