Medication costs, also known as drug costs are a common health care cost for many people and health care systems. Prescription costs are the costs to the end consumer. Medication costs are influenced by multiple factors such as patents, stakeholder influence, and marketing expenses. A number of countries including Canada, parts of Europe, and Brazil use external reference pricing as a means to compare drug prices and to determine a base price for a particular medication. Other countries use pharmacoeconomics, which looks at the cost/benefit of a product in terms of quality of life, alternative treatments (drug and non-drug), and cost reduction or avoidance in other parts of the health care system (for example, a drug may reduce the need for a surgical intervention, thereby saving money). Structures like the UK's National Institute for Health and Clinical Excellence and to a lesser extent Canada's Common Drug Review (a division of the Canadian Agency for Drugs and Technologies in Health) evaluate products in this way.
Medication costs can be listed in a number of ways including cost per defined daily dose, cost per specific period of time, cost per prescribed daily dose, and cost proportional to gross national product.
A November 2020 study found that more than 1.1 million senior citizens in the U.S. Medicare program are expected to die prematurely over the next decade because they will be unable to afford their prescription medications, requiring an additional $17.7 billion to be spent annually on avoidable medical costs due to health complications.