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The New York Times Can’t Even Talk About Publicly Funded Drug Research

By Dean Baker | CEPR | July 16, 2019

Austin Frakt had a peculiar piece in the NYT Upshot section, which told readers, “there is no single, best policy for drug prices.” The piece is peculiar because for some reason Frakt opts not to even consider the policy of direct public funding for research, which would then allow all new drugs to be sold at generic prices.

While there are problems with any system, direct funding, which could be done through various mechanisms, would permanently end the problem of high-priced drugs. With the research costs paid upfront, the price of the drugs would simply cover the manufacturing cost with normal profits. In nearly all cases, this would mean prices would be low, generally less than 10 percent of current prices for patent-protected drugs and in some cases less than 1 percent.

This is also not a far-out idea. It has long been pushed by several prominent economists, most notably Joe Stiglitz. The idea of delinking drug prices from research costs has also been pushed in international forums by China, India, and many other developing countries. In fact, if Trump were pursuing his trade war with China in the interest of working people, instead of the rich, such a shift in funding for drug research could well be an outcome.

In any case, it is bizarre that a piece that purports to be an overview of ways to lower drug prices would not even mention this issue.

July 16, 2019 - Posted by | Economics | , ,

1 Comment »

  1. “normal profit” – of course this is never defined. 100x markups are common, 10x is on the low side.
    I believe many drugs are already developed with grant money and then the patent is sold to the highest bidder. The US government has a bad record at controlling prices – government contracts are the dream of every business.

    Comment by GGH | July 17, 2019 | Reply


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