U.S. Drug Prices Set to Fall Without Government Price Controls, New Report Shows

 A new study by former Trump Chief Economist Tomas J. Philipson, Deyu Zhang, and Qi Zhang, all economists at the University of Chicago and published by Unleash Prosperity, finds that pharmaceutical drug prices will fall in the United States and around the world without the adoption of government price controls.

Americans and politicians in Washington complain endlessly about prescription drug prices. It is true, newly introduced drugs carry a high price tag, which allows them to capture the R&D costs and the margin for making a profit on the investment.

However, some 90% of drugs sold in America are off-patent generics as opposed to patented brand-name drugs. Those prices are twice as high in Europe, Canada, Britain, and Japan. When comparing the volume weighted average of drugs, the prices the government pays in the U.S. for prescription drugs are therefore 18% lower than most industrialized nations.

The study shows that the proposal for the U.S. to adopt Europe-style price controls would stifle new drug innovation. If the reverse took place, the other rich nations of the world would adopt the U.S. pricing model of new and generic drugs, the global free rider problem would end, and those nations would lower and not raise their total drug spending.

The rapid innovation for life-saving cures would continue without increasing the overall cost of drugs in most countries.

https://mailchi.mp/committeetounleashprosperity/unleash-prosperity-hotline-13362832