Health Care Reform And The Innovation Myth

For anyone who’s worried about the alleged drop in innovation that will occur in the pharmaceutical industry if the United States implements a universal health care system, this interview with with Dr. Jerry Avon is a must read.

This part is worth highlighting in particular:

But let’s go back to the basic economics for a second. How can it not be the case that if profits go down, incentives for innovation won’t follow? How can that be wrong?

It’s not true for a few reasons. One is that the amount of really good science you get for your drug dollar is even less than the 15 percent I mentioned before, because that 15 percent also includes the development of me-too drugs. That’s one aspect of the answer. We are not getting that much drug innovation for our dollar at present.

But perhaps a better answer is that if we want innovation and scientific discovery we should fund innovation and scientific discovery, not go after it bass-ackwards by paying too much for overpriced drugs and hoping that some of the excess profit will trickle down into innovative research. If I’m right that a lot of the important and useful innovation comes from NIH studies, then the way to get more innovation is to fund innovation. It frankly would be a far more interesting use of any given dollar one wanted to spend.


An even better question that should be asked is : Why should sick Americans subsidize artificially low drug prices for Europeans?

Seems kind of socialist if you ask me…

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