The majority of drug research spending is in the US, and the majority of drug consumption is in the US, both per-capita and in aggregate. Once a drug has been researched and FDA-approved and can be sold in an un-price controlled market to recoup fixed costs, it's cost-effective to go ahead with approval hurdles for marginal profits in controlled markets like EU countries.
In effect, high US drug prices subsidize lower prices elsewhere.
I see your article and raise it [1]. TLDR, This paper says that though is true that US expends more in drug development, it actually has the worst bang per buck in the discovery of new drugs. The authors suggest that there is little evidence that most of the new drugs (sold in the US at whatever the price the company wants to stick in it) are clinically better.
http://emoglen.law.columbia.edu/twiki/pub/LawNetSoc/BahradSo... seems to expound on a criticism of the first paper, which asserts that it muddles the data by classifying drug origin by company headquarters, rather than the market in which the research is done and the drug is first patented in. With that reclassification, their data seems to show that US-based research (though not necessarily US-headquartered companies) substantially outperforms EU-based research both in quantity of NMEs and sales.
> At first glance, the organizations with their headquarters based in European countries are characterized by a higher probability of market launch for compounds entering clinical development. However, when the composition of research portfolios is taken into account, the apparent comparative advantage of European organizations vanishes.
Your second link seems to reinforce this:
> The European Federation of Pharmaceutical Industries and Associations reported that, between 1990 and 2003, its members increased their research and development investments in Europe by 2.6-fold and in the US by fourfold
It's obviously silly to claim that all research has fled Europe (it clearly has not), but it does seem evident that European-based pharma countries are electing to research and bring to market first in the US. I think the question then is "why?" - is it the US's higher effective ceiling on drug prices? Higher per-capita drug spending? Higher probability of success through the FDA versus the EMA? What are the causes, and what are the effects?
Economic wisdom tells us that long-term price controls reliably cause shortages, either by underpricing demand and/or by disincentivizing supply; I don't think it's unreasonable to presume that the same effect would be in play to some degree here. The pharma industry is obviously extremely distorted by regulatory intervention, both in barriers to entry for a new product and barriers to entry for competition on existing products, so conventional wisdom can't be applied across the board, but I can't imagine that the effects of price controls are negligible.
Why was this voted down? cheald presents a reasonable argument. Certainly no ad-hominem attacks. Thimothy then presents a rebuttal with reasonable counter-claims.
I find both points of view interesting and contributing to the discussion. This is a valid dialectic between two parties. I thought HN did not downvote arguments merely because we disagreed with them, which is one of the reasons it has appeal to me.
http://www.nature.com/nrd/journal/v6/n4/full/nrd2293.html
The majority of drug research spending is in the US, and the majority of drug consumption is in the US, both per-capita and in aggregate. Once a drug has been researched and FDA-approved and can be sold in an un-price controlled market to recoup fixed costs, it's cost-effective to go ahead with approval hurdles for marginal profits in controlled markets like EU countries.
In effect, high US drug prices subsidize lower prices elsewhere.