United States

The United States is a highly competitive retail market of prescription pharmaceutical and products and has only become increasingly crowded with the recent discussions and proposals aimed to limit the runaway, often unchecked increases in drug prices that have affected patients with many serious conditions, regardless of whether they have health insurance or not. While federal and some state regulations have initiated steps to limit drug pricing, most prices in the U.S. still reflect what the manufacturer thinks the market is willing to pay. However, to obtain optimal reimbursement for your product, you must understand that the ecosystem is complex – one of the most complex in the world.

US Payer Stakeholders

The three primary U.S. payers are governments, employers, and individuals. The public sector is the largest single payer, but private payers cover more than half of those who have health insurance. The Affordable Care Act (ACA), or “Obamacare,” has increased the government’s payer role, but it has not yet surpassed the size of the private system.

The combined federal and individual state governments pay prescription drug benefits primarily through one of two public insurance programs: Medicare and Medicaid.


Medicare is the federal health insurance program for people over age 65 and people under 65 with long-term disabilities. It is comprised of three parts:

    1. Part A (hospital services, supplies and drugs dispensed during inpatient care)
    2. Part B (outpatient clinics, doctor offices and payment for some cancer drugs)
    3. Part D is the Medicare prescription drug benefit

While most prescription drugs are covered under Medicare Part D, prescription drugs administered by your physician, a dialysis facility, and outpatient prescriptions, such as oral chemotherapy, are covered under Part B Medicare.


Medicaid is a joint federal and state program that, together with the Children’s Health Insurance Program (CHIP), provides health coverage for some low-income people, families and children, pregnant women, the elderly, and people with disabilities. Each of the 50 states is responsible for most of the funding for Medicaid, and each determines its level of coverage.

Due to the size of the program, medicines covered under Medicaid are subject to government-mandated prices and receive extra rebates from manufacturers to ensure that states get the best price for drugs. As manufacturers compete for business, they frequently offer discounts even beyond these government-mandated “best prices.”


Employment based coverage is the largest sponsor of private health plans in the U.S. Organizations (companies, government agencies and non-profit organizations) usually purchase group health plans through large commercial providers such as for-profit UnitedHealthcare, Humana, Aetna and others, as well as non-profit organizations such as Blue Cross Blue Shield.


Individuals pay for prescription drugs by cost sharing (insurance premiums and co-pay or coinsurance when receiving actual care) for part of their cost of care. The healthcare cost, including prescription drugs, is shared between employees and their employers. An individual can also purchase his or her own plan.

Important Points to Keep in Mind

Unlike in Europe, there is no U.S. pricing and/or reimbursement authority that determines inclusion, price, or treatment course on a health plan’s drug list. Reimbursement negotiations and decisions are not transparent; they vary greatly according to the payer channel, therapeutic category, unique product attributes and manufacturer strategy. A manufacturer might negotiate with different payer organizations (health plans) with varying degrees of success.

Due to this fragmented market, payers often contract third-party Pharmacy Benefit Managers (PBMs) to negotiate discounts and rebates for a drug on the U.S. market. Additional discounts are also granted to health plans serving Medicaid and other programs. These interdependent actors add to the complexity of the U.S. pricing and reimbursement ecosystem.

Demand Drives Drug Prices

In the United States, drug companies can adjust their prices according to demand, forecast demand, or other market forces. This price change could occur based on additional indications, new entrants, or the introduction of a generic, for example. As a result, the United States has become the best case-study of a market in which demand-side controls, or utilization management techniques, have become necessary to control payers’ healthcare costs.

Demand control is achieved in several ways:

    • Benefit (health plan) design, cost sharing programs (influencing manufacturers to offer patient assistance initiatives)
    • Formulary decisions informed by Pharmacy & Therapeutics Committees within health plans, possibly the closest thing the United States has to Healthcare Technology Assessment (HTA) reviews

Implications for Industry

The United States is known for having some of the highest drug “sticker” prices worldwide. However, these do not reflect the actual prices to U.S. payers. This often leads to incorrect and unrealistic country-to-country price comparisons by the media, policymakers, and the public alike. In fact, pharmaceutical company representatives have even been called to testify to policymakers on Capitol Hill to defend their prices of medications due to inappropriate list price (ex-factory price) comparisons with ex-U.S. price benchmarks and surging prices.

To avoid these pitfalls, you must position your innovation to succeed with all your stakeholders and audiences. You need a partner who knows the complexities of both the U.S. market access and communications landscape.

In the world’s largest pharmaceutical market, there is also tremendous opportunity. GLOBALHealthPR has years of experience in communicating complex U.S. stakeholder and patient access landscapes, positioning products for success, and defending innovations against critics.

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