US shoulders disproportionate cost of new medications, report finds
New research by the Office of Health Policy shows the U.S. shoulders a disproportionate cost when it comes to paying for prescription medication.
The report, obtained by FOX Business, shows Americans account for nearly 80% of the innovative revenue for drugs launched between 2020 and 2025. The report also shows that no other country comes close to the United States' contribution to shouldering the cost of research and development. The next-closest country paying the cost for R&D in that timeframe is Japan, which accounts for about 5.5% of innovative revenues for new medications coming online and roughly 5.8% of innovative revenues for all medications.
The U.S. trade representative’s office opened a new Section 301 investigation into Germany’s plan to reduce spending on pharmaceutical products on June 18. Germany accounts for nearly 3.4% of revenue for innovative medications from 2020 to 2025. The result of the investigation could allow President Donald Trump to make good on threats to add 100% tariffs on imports of pharmaceutical medications from Germany or tariffs on other imported goods from the country.
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The U.S. trade representative’s office opened a new Section 301 investigation into Germany’s plan to reduce spending on pharmaceutical products on June 18. (George Frey/Bloomberg via Getty Images)
"I am particularly concerned with news that Germany is fast-tracking legislation that would further reduce its spending on innovative pharmaceuticals," U.S. Trade Representative Jamieson Greer said in a statement. "This is a serious step backwards at a time when our trading partners need to step up and start paying their fair share to fund innovative pharmaceutical research and development."
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The USTR is taking public comment on the investigation through Aug. 10. A public hearing related to the investigation will be held on Sept. 22.
Johnson & Johnson CEO Joaquin Duato told FOX Business Network's "Mornings with Maria" this month that "We agree with the government that we have to make other countries pay their fair share, especially Europe. And at the same time, we have to work in the middleman. The middleman captures about 50% of the value of the medicine, and we want that value to go directly to the patient to reduce their out-of-pocket costs. So in those areas, the government is always going to find us, Johnson & Johnson, working with them."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| JNJ | JOHNSON & JOHNSON | 231.29 | +2.90 | +1.27% |
Trump said in a Truth Social post earlier this month that, "Most Favored Nations would not be possible without my use of TARIFFS, which are getting other Countries to ‘pay up’ instead of relying on American Patients getting ripped off, as they were for decades until I ordered an immediate ‘stop’ to this very unfair and, frankly, foolish situation."
Seventeen of the largest pharmaceutical companies signed deals for Most Favored Nations status for some medications.
A person holds medication from a bottle in their hand. (Getty Images)
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This new report from the Office of Health Policy could be used as a basis of proof that validates the concerns of the Trump administration that the costs Americans have been paying for medications are disproportionally high compared with the rest of the developed world.