Presidential and congressional candidates are now offering several new policy proposals that would affect the pharmaceutical industry. Most of these would attempt to control the price of pharmaceutical products or affect prices by increasing the supply of imported or reimported products. One of the principal policy issues raised by the proposals is the effect they would have on the industry’s incentives to discover and develop new products. While some argue that these plans would have devastating effects on industry R&D, others contend that the industry will maintain a vigorous effort to develop new drugs even with reduced revenues.

In order to provide background for this policy debate, this health policy discussion will present three new academic studies about the research and development process in the pharmaceutical and biotechnology industry. These studies shed new light on the risks and rewards of R&D and the effects of changing economic conditions on the performance and structure of the industry. Two industry executives and one academic, all with a lifetime of experience in studying or participating in the R&D process will comment on the studies.