In a 1999 paper on international drug price comparisons, Patricia M. Danzon and Michael F. Furukawa illustrate how much the choice of currency conversion method matters.
U.S. drugs are less expensive than all countries but France if a health purchasing power parity basket is used to convert. They are more expensive than in most other countries if a GDP purchasing power parity basket or current exchange rate method is used.
For the record, the authors conclude that cost differences were in line with national incomes. The U.S. had a more lightly regulated, competitive market structure. It had high prices for new originator products and high use of new products but stronger generic competition and higher generic shares. In the U.S., a relatively larger share of a drug’s price went to its manufacturer rather than to intermediaries. The U.S. regulatory structure also appeared “more favorable to innovation.”