Worldwide markets for medicines are determined by geographic boundaries as well as social, political and economic factors. Conditions such as standard of living, citizens earning power, employment rates, form of government and social programs, trade policy, currency rates, and restraints on competition will all affect the price of medicines available.

There are large discrepancies for medicine prices between countries and even within the same country. In developing countries, most medicines are paid for out-of-pocket by the individual and not subsidized through health insurance such as in the United States and Europe. Americans pay the highest prices in the world for prescription medicines due to the fact that the US market accounts for about 80% of worldwide medicine revenues. Americans, however, do not generate 80% of the prescriptions. The high prices and revenues of the American medicine market help subsidize the lower medicine prices found in Europe and other parts of the world.

In a study on medicine prices in thirteen countries presented to the World Health Organization, Dr. Curt Furberg, a professor of health sciences in the United States identified policies used around the world that have lowered medicine prices in those countries. They include government establishment of medicine reimbursement rates. The US is currently the only country with unrestricted pricing. In other countries, governments establish medicine reimbursement rates. There are also no restrictions in the US on medicine price increases while some countries restrict increases and regularly review medicine prices and make necessary adjustments. Other countries use reference pricing which sets medicine reimbursement at or near the lowest price within a medicine class. Many countries also have manufacturer rebates, which keep health plans from using competitors’ medicines as well as allowing competitive bidding on brand name medicines. These price controls are the reasons many countries have lower medicine prices. The US has relied more on patent law and competition.