Debunking The Pharmaceutical Research ‘Free Rider’ Myth: A response To Yu, Helms, And Bach

Policy researchers at the Memorial Sloan Kettering Center for Health Policy and Outcomes have published a recent, valuable Health Affairs Blog post. The post shows that major pharmaceutical companies that manufacture some of the top-selling drugs “charge much more for their drugs in the United States than they do in other Western countries.” US prices averaged 2.4 times more than the $81 billion Americans would have paid at the average prices in other affluent countries; Americans paid a total of about $197 billion, or an excess of $116 billion per year. That would be $1.16 trillion in higher charges in a decade. The one danger posed by this excellent work by Nancy Yu, Zachary Helms, and Peter Bach is that, because it focuses on the excess of US prices over prices in other developed countries, it could promote the “foreign free-rider myth”—the idea that US prices have to be high to pay for pharmaceutical research and development because other nations with lower prices don’t pay their fair share of research and development costs. This claim that “everyone gets a free ride off us,” pushed so vigorously by pharmaceutical companies to the US public and policy makers, is simply not true. The claim has been made so often for so long that many hold it as an economic fact, even though no solid evidence is presented to back it up. In fact, other countries such as Canada and the United Kingdom are keen to attract pharmaceutical research and development investments. ...
Source: Health Affairs Blog - Category: Health Management Authors: Tags: Costs and Spending Drugs and Medical Innovation Payment Policy Big Pharma drug innovation drug pricing free-rider myth Research and Development Source Type: blogs