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Tuesday, 5th December 2006

The Human Cost of Federal Price Negotiations: The Medicare Prescription Drug Benefit and Pharmaceutical Innovation

The Human Cost of Federal Price Negotiations: The Medicare Prescription Drug Benefit and Pharmaceutical Innovation
Source: The Manhattan Institute
"In the short run, federal price negotiations would allow some consumers to receive medicines at lower prices, or, alternatively, would yield savings for federal taxpayers. The longer-term human costs of government price-negotiation, however, are likely to be large and adverse. This paper estimates that investment in new drug research and development would decline by approximately $10 billion per year. It estimates as well the effect of reduced pharmaceutical R & D investment on American life expectancies, or expected 'life-years'. Specifically, this work projects that federal price negotiations would yield a loss of 5 million expected life-years annually, an adverse effect that can be valued conservatively at about $500 billion per year, an amount far in excess of total annual U.S. spending on pharmaceuticals."
+ Full Report (PDF; 1.7 MB)


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