According to the authors of a recent Health Affairs blog post, pharmaceutical companies’ higher drug pricing in the United States, as compared with prices in other Western countries, could be cut without affecting research and development costs.
Henry Grabowski, a Duke University professor emeritus, and Richard Manning, with Bates White, LLC, called the claims by the article’s authors “bold and unfounded” in a response published on Health Affairs.
“Economic models of investment behavior under uncertainty indicate that spending will be driven by the expected future gains from these investments,” Grabowski and Manning write. “If US policy makers were to enact regulations that drive prices down significantly, as Yu and her colleagues suggest, many projects that now have positive expected returns would no longer be profitable. Current prices would be lower but so would the expected level of future innovation.”
Grabowski and Manning added the authors isolated research and development investments from other expenses relevant to product development, including “costs of production, management, distribution and provision of information about clinical trial results … .”