That’s some innovation
I tweeted this yesterday but wanted to make it clearer after the Biden administration announced names of the first 10 drugs chosen for price negotiation under last year’s Inflation Reduction Act.
Industry lobby PhRMA argues (and Republicans back them) that high U.S. prices reflect the high cost of drug development. Allowing the government to negotiate lower bulk prices for drugs (as takes place in Europe and eleswhere) will stifle innovation, they argue, is “tantamount to extortion,” and will cut funds for research.
(It might also lower investors’ and executives’ take-homes, but don’t look too closely at that, okay?)
Listen, “Americans pay from two to six times more than the rest of the world” for brand name prescriptions (2015). “American patients have long borne the burden” of “juicy returns” from $630bn in global sales in 2022, “65% of the global haul,” reports The Economist, which estimates the surcharge at two to three times more than consumers pay in other wealthy countries. “America is the piggy-bank of the pharma world,” David Mitchell of Patients for Affordable Drugs tells The Economist.
Seen another way, PhRMA’s “stifle innovation” argument is that U.S. consumers’ higher costs subsidize the rest of the world’s low drug prices. PhRMA wants to keep it that way. Is that their argument? It sounds like that’s their argument.