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Research costs provide no basis for high drug prices in U.S.

Written by Diane Archer

Pharmaceutical companies often argue that they need to charge high prices for their drugs in the U.S. to offset their research and development costs. A new study published in Health Affairs looks at the amount drug companies spend on research and development. It finds that research costs provide no basis for high drug prices in the U.S.

As we all know, Americans pay a lot more than Europeans for many prescription drugs, sometimes as much as two to five times more. List prices in Europe tend to be 38 to 52 percent of what we pay. It’s hard to understand the justification for such high drug prices in the U.S.

The researchers looked at the 15 pharmaceutical companies with the 20 top-selling drugs. They found that the prices the pharmaceutical companies charge in the U.S. earn them tens of billions of dollars more than they spend on research and development around on the world. In short, in 2015, pharmaceutical companies generated an additional $116 billion because of the high U.S. prices, $40 billion more than their worldwide research and development expenses.

The researchers noted that European countries all use pharmacoeconomic analyses in negotiating drug prices. The U.S. does not do so. The researchers do not take a position as to whether prices in the U.S. are too high. But, they do question the propriety of U.S. taxpayers, businesses and patients funding worldwide drug research.

Why should Americans pay a huge drug price premium to support worldwide drug research? It seems a very fair question to ask our representatives in Congress. As it is, a large majority of Americans, including Republicans, Democrats and Independents favor government drug price negotiation.

If you support drug price negotiation, please sign this petition to Congress.

Here’s more from Just Care:



1 Comment

  • …greed, pure greed, along with the fact that many of our government officials all the way to the White House have effectively been bought off by Big Pharma thorough bribes…er…lobbying, and campaign contributions. (the latter thanks in part to Citizens United). Any time a bill to control medication prices or allow for negotiations comes up, Pharma dips into their vast pool of funds and makes it rain on Capital Hill in order to defeat such measures or support those which benefit them. (like the provision to reduce development/testing time which would increase the risk to consumer safety).

    As to paying for research that benefits other nations with lower drug prices, it is not unlike the fact US citizens pay a major percentage of every tax dollar to the military budget, a good portion of which is used to maintain bases and operations on foreign soil which allows those nations to spend more of their revenue elsewhere. This is the reason why a number of nations in Europe can afford nationalised healthcare, low cost or free college, good public education, and top notch infrastructure, while our nation is falling apart on all accounts. The US has a much bigger military presence worldwide than both China and Russia combined. OK so that may sound like a Libertarian/Conservative POV (which I am not) but it always made me wonder why we put out more on a global scale (and medication prices are part of this) than for our own citizens back here at home.

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