Posted by Michael Wonder on 02 Jul 2017
High drug prices are bad. Cutting them could be worse.
30 June 2017 - It’s easy to be outraged by high drug prices. Yet under current circumstances, simply slashing them could make matters worse.
That may be hard to see at first. After all, the case against soaring drug prices is being widely and persuasively made. Even the prestigious biology journal Cell recently published a commentary with the provocative title “How Much Longer Will We Put Up With $100,000 Cancer Drugs?” Donald J. Trump once railed that drug companies are “getting away with murder.”
What’s more, while high drug prices evoke strong emotions — with lives at stake — sober economic analysis also reaches a similar conclusion. Drug pricing appears to violate basic cost-benefit principles: The cost of new drugs is often higher than the health benefit they provide, compared with the alternatives that are already on the market.
