Could health-care reform in America stop innovation in pharmaceuticals?
THE number of Americans denouncing their president’s plans for health-care reform as unvarnished socialism would presumably rise dramatically if Barack Obama decided to institute price controls for drugs. Yet a study published this week in Health Affairs, an industry journal, suggests he should do exactly that. Governments around the world are struggling to cope with the rising cost of health care, and of drugs in particular (see chart). Many rich countries have resorted to price controls, and some on the American left advocate them noisily. But drug firms maintain that America, where they are free to price patented pills largely as they please, is the engine of global pharmaceutical innovation, while price-controlling Europeans are free riders. That, says PhRMA, the industry’s lobby based in Washington, DC, is because price regulations seen in other rich countries “chill innovation, impede patients’ access to the newest cutting-edge medicines, and trigger innovators to relocate to cou
