E-DRUG: Higher US prices pay for none of corporate R&D
------------------------------------------------------------------------
Steve,
If you look through the numbers of this 2017 important study out of Sloan-Kettering,
all the R&D costs are recovered at European prices; so none of the higher US prices pay for any R&D.
The higher US prices are all extra profit above profit margins in the European countries studied. See
https://www.healthaffairs.org/do/10.1377/hblog20170307.059036/full/
It might be simple and effective to let Public Citizen readers know.
There is no evidence to support the claim that higher prices are needed to pay for R&D, or that European/Canadian prices do not.
Don
PS This analysis is based on my 30 years of policy analysis and does not represent the views of any institution to which I am affiliated.
Donald W. Light
Princeton University
USA
"Donald W. Light Jr." <dlight@princeton.edu>
E-DRUG: Higher US prices pay for none of corporate R&D (2)
--------------------------------------------------------------------------
Dear Donald,
I would like to confirm your view on the relationship between higher drug
prices in the US and a lack of justification of the same when it comes to
R&D.
From several confidential discussions with representatives of different
Pharma companies, I know that there is a tendency to raise prices in the
US, not because there is a need to do so, but because the systemic context
of drug pricing is simply conducive to to so. Rather than a complex
reasoning for the rise in prices the answer from industry insiders tends to
be a simple: "Why not?".
For obvious reasons it is difficult to get an official statement to confirm
this. Nonetheless, I believe that the regulatory and normative context for
drug pricing in the US invites inflated pricing entirely independent of R&D
or other "excuses".
Kind regards,
Joachim Delventhal
(Copenhagen Business School)
Joachim Delventhal <joachim.delventhal@gmail.com>
E-DRUG: Higher US prices pay for none of corporate R&D (3)
--------------------------------------------------------------------------
Thanks for writing. Very helpful. As an official reference, and in fact an entire pricing system the embodies this behind-the-scenes insight, isn't the UK PPRC pricing-through-managing-profits scheme real evidence, year after year?
Even abpi, the UK pharma trade association, describes it that way. See abpi. Understanding the 2014 Pharmaceutical Price Regulation Scheme, or
https://www.abpi.org.uk/media/1561/understanding_pprs2014.pdf
The result, according to the trade association, is the lowest prices in Europe. This implies that all prices above UK prices, in France, in Germany, etc more than cover R&D, productivity, and other costs.
Joel Lexchin and I published evidence of this point a year ago in http://www.bmj.com/content/331/7522/958
Note that using NSF data, we conclude that drug companies devote about 1.4% of sales for basic research to discover new medicines, net of taxpayers subsidies.
This and many related articles are readily available at pharmamyths.net, such as the demythologizing the inflated costs of pharma R&D as reported by DiMasi et al.
Don
Donald Light
Princeton University
"Donald W. Light Jr." <dlight@princeton.edu>