Study: Lower prices don't harm innovation

In the age-old fight for superiority between Europe and the U.S., the old countries have chalked up another point. This time it's pharma R&D productivity and innovation that's the prize, and new data suggests that European drug companies are just better at it. We'll leave the research intricacies to our sister pub FierceBiotech, because in the land of drugs-already-for-sale, we're more interested in the study author's "Policy Reflections."

You see, in all the debate over healthcare reform and drug price negotiation, one of the pharma industry's big arguments has been that holding down prices also depresses innovation. If the U.S. government wielded its negotiating power to force down drug costs, then research would suffer, and so, by extension, would you and me and every other person who'll get ever get sick. Which makes Big Brother into the Big Bad Wolf.

But this new study indicates that the heavily negotiated drug prices in Europe haven't actually held European countries back. "Congressional leaders and others concerned about high prices of new patented drugs will be heartened by this analysis, because lower European prices seem to be no deterrent to strong research productivity," author Donald Light writes.

Drugmakers "recover all costs and make a good profit at European prices," Light asserts. And he says that Europeans aren't "free riders" on American patients, i.e., higher American drug prices aren't necessary to offset lower costs elsewhere. What do you think?

- see the article in Health Affairs
- check out the Health Blog post

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