Why are drug prices in the US so high? In a recent and long awaited white paper, the US Council of Economic Advisers provides erroneous answers to a problem that is threatening household, state, and national budgets. 1

The advisers tell the White House and Congress that other affluent countries in the Organisation for Economic Cooperation and Development (OECD) force drug companies to overcharge Americans because “centralized pricing” in these countries sets prices so low that they act as “foreign free riders,” who allegedly fail to pay for the cost of research and development. As explained in The BMJ years ago and updated here, industry leaders, the US trade association for pharmaceuticals, and the commissioner of the FDA made this claim in the early 2000s to redirect widespread anger at high prices. 2 3 Independent reports and evidence then and now indicate that prices for patented drugs in other affluent countries such as the UK and Canada do pay for research and development. 3 4 5 Higher prices in the US simply generate extra profits.