US Drug Prices And R & D, Take 2: A Reply To Grabowski And Manning, And To Light

Recently we (along with Zachary Helms) published a Health Affairs Blog post refuting the pharmaceutical industry argument that the higher prices the industry charges in the US are justified because they are necessary to support research and development (R&D). Our analysis found that US taxpayers, patients, and private industry were paying 1.7 times the global R&D expenses of major pharmaceutical corporations as a result of paying more than these corporations charge European countries for the same products — an excess amounting to $40 billion in 2015, about 10 percent of total spending in the US on pharmaceuticals. Health Affairs Blog published two posts responding to our work. While we appreciate the comments from Grabowski and Manning and from Light, and we note the extent to which their views differ from one another, we think both responses may have misunderstood the inferential framework of our analysis. How We Partitioned The US Premium For Pharmaceuticals Into Required Profit, Global R&D Expenses, And Excess Above These Two Our analysis began with a bold assumption: that it was reasonable that global R&D costs incurred by major pharmaceutical corporations should be 100 percent subsidized by US sources, even though these are global companies, patients all over the world benefit from the products, and many of the companies earn more in revenue outside the US than within it. We applied this assumption because when combined with other conservative assum...
Source: Health Affairs Blog - Category: Health Management Authors: Tags: Costs and Spending Drugs and Medical Innovation Pharmaceutical R&D prescription drug prices Source Type: blogs