Is there a more formal way of saying:
"In most western countries, such as the United States, an increased level of ... has been observed."
Or should such a sentence be rephrased completely?
The phrase "such as" is a formal phrase, and as such, you should feel free to use it in formal writing. (The informal equivalent would be "like": Places like the US have seen an increase in...)
Some alternatives include:
There is a subtle difference between 'such as' and 'like'.
On the other hand
Could be interpreted as
Which may not be what you mean.
I don't know about formality, but if you want to capitalise on the residual popularity of Miss Teen USA 2007 then you could do worse than follow the wonderful precedent set by Miss South Carolina, who responded to the question
with (emphasis added)...
On the "rephrase completely" note, I would consider taking the center clause out:
The U.S. is now pretty much the archetype western country, so you're not providing additional information. If you want to emphasize the U.S. is included, then you could use:
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