US Consumers Support World Pharmaceutical Innovation
June 29th, 2007
If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
American drug prices remain the highest in the world. Comparisons are often made with drugs prices elsewhere–in both the developed world and the developing world. Online pharmacies which can supply drugs at a huge discount to American prices remains a big political and ethical issue.
Mark Keliman, Professor of Public Policy at UCLA makes an important point worth remembering whenever we discuss drug prices,
Where a drug is invented doesn’t really matter much. A company that invents a drug in Europe still gets much of its profit from the American market. So the question is, what would be the effect on innovation of squeezing down on pharmaceutical prices in the U.S.?
My first guess is that it would slow things down. If both Wyeth and Novartis have to consider that their next blockbuster drug is going to bring in less revenue, the probability that Drug X will be that blockbuster has to be higher in order to justify spending the money to find out. That means some good prospects get overlooked; presumably not forever, but for now. If every country tries to free-ride by making sure that its consumers don’t pay their share of the cost of innovation, it figures that there will be less innovation. Maybe that’s not right; maybe drug companies, faced with a somewhat less creamy American cash cow, would be able to negotiate up prices in Europe and Asia. [link]
The crucial question to be considered is: Should American consumers continue to subsidize drug prices elsewhere, and what would be the effect on innovation of controlling drug prices in America vis-a-via innovation.
If you enjoyed this post, make sure you subscribe to my RSS feed!