Pharmaceutical Price Regulation: Public Perceptions, Economic Realities, and Empirical Evidence
Book Forum
February 17, 2009
Breakthrough drugs have saved millions of lives and improved the health of people around the world. But as health care costs become a prominent part of federal, state, and private budgets, policymakers are seeking ways to make sure we are getting the most for the money we spend. Some of these approaches, critics fear, could have the effect of restricting the use of new medicines based on price, without a full consideration of clinical benefit.
Comparative effectiveness research (CER) has been proposed as one vehicle to make sure we get more value from health care spending, and it has been the subject of such skepticism. Critics worry that these policies are a step toward more explicit regulation based on price. Can comparative research provide reliable data on clinical utility and also produce cost savings without tying the information to broader efforts to explicitly regulate access based on cost? What are the potential consequences to public health and drug innovation? Most importantly, can CER be pursued appropriately so that it improves patient health and medical practice but does not impede long-run progress by increasing market uncertainty and reducing the incentives needed to conduct necessary innovative biomedical research?
In their book Pharmaceutical Price Regulation: Public Perceptions, Economic Realities, and Empirical Evidence (AEI Press, January 2009), John A. Vernon and Joseph H. Golec argue that price controls inevitably lead to a trade-off between lower drug prices today and innovative drug breakthroughs in the future. In the current economic climate, government officials faced with budget shortfalls and frequent elections may be tempted to succumb to the cheaper, more popular short-term goal of lowering drug prices. However, doing so will rob pharmaceutical companies of the profit and capital they need to achieve their long-term research and development goals, which bring new drugs to market that improve quality of life and reduce health care costs over the long haul.
At this event, the authors will discuss their findings and defend the role of the free market in the pharmaceutical industry. They will be joined by AEI's John E. Calfee; Mark McClellan, M.D., of the Brookings Institution; and Sean Tunis, M.D., of the Center for Medical Technology Policy. AEI's Scott Gottlieb, M.D., will moderate.
Comparative effectiveness research (CER) has been proposed as one vehicle to make sure we get more value from health care spending, and it has been the subject of such skepticism. Critics worry that these policies are a step toward more explicit regulation based on price. Can comparative research provide reliable data on clinical utility and also produce cost savings without tying the information to broader efforts to explicitly regulate access based on cost? What are the potential consequences to public health and drug innovation? Most importantly, can CER be pursued appropriately so that it improves patient health and medical practice but does not impede long-run progress by increasing market uncertainty and reducing the incentives needed to conduct necessary innovative biomedical research?
In their book Pharmaceutical Price Regulation: Public Perceptions, Economic Realities, and Empirical Evidence (AEI Press, January 2009), John A. Vernon and Joseph H. Golec argue that price controls inevitably lead to a trade-off between lower drug prices today and innovative drug breakthroughs in the future. In the current economic climate, government officials faced with budget shortfalls and frequent elections may be tempted to succumb to the cheaper, more popular short-term goal of lowering drug prices. However, doing so will rob pharmaceutical companies of the profit and capital they need to achieve their long-term research and development goals, which bring new drugs to market that improve quality of life and reduce health care costs over the long haul.
At this event, the authors will discuss their findings and defend the role of the free market in the pharmaceutical industry. They will be joined by AEI's John E. Calfee; Mark McClellan, M.D., of the Brookings Institution; and Sean Tunis, M.D., of the Center for Medical Technology Policy. AEI's Scott Gottlieb, M.D., will moderate.
