Both wrong. Labor costs are high in Europe too, and people have as much money to spend. Also, if that was the reason, American patients would just buy the European products since they where cheaper. Also the drugs sold on the two sides of the Canadian border are produced the same places but sell at much lower prices outside the US.

The reason the North American market is so expensive is because of convoluted and honestly just shady practices of middlemen who negotiate on behalf of insurances companies and pharmacies but have a vested interest in pushing the list price as high as possible, but then demanding an insane rebate against those high list prices. During the congressional hearings it was stated that Eli Lilly paid something like 68% in rebates in order to get onto the insurance coverage plans. Also, even though their prices where rising year after year, they took back less and less after rebates where figured in. That means that whenever Eli Lilly sells 100$ worth of insulin, 22$ goes towards research and development, clinical trials, branding, marketing, production and distribution, and then 68$ goes to the pharmacy benefits managers who kick it back to the insurance companies, who then go to their customers and demand a copay as a percentage of the 100$ potentially not even needing to cover anything and just making bank on the drug sales, while charging their customers for the privilege of taking their money.

Than in Europe, Australia, and the UK? Laughable.