New drugs. Cheaper drugs. Why not both?

The Indicator from Planet Money

NPR

Business

4.7 • 9.2K Ratings

🗓️ 15 March 2023

⏱️ 9 minutes

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Summary

Why are American consumers paying out the wazoo for drugs? Drug companies say it's because they need that money to fund the research and development that goes into making new life-saving drugs. Today we talk to a health economist who says you actually can have it all, lower prices and more innovation.

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Transcript

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0:00.0	NPR.
0:12.4	In the US, brand name drugs are about three times what they are in other wealthy countries.
0:17.9	Three times.
0:18.9	This is part of why Americans spend so much more on healthcare.
0:23.3	And use how the argument sometimes goes.
0:26.2	People might say that Americans pay for research and development for the world.
0:31.0	Drug companies typically make up about 45% of their income from Americans.
0:35.7	And so the other countries are free riders, so to speak.
0:40.1	Making a new drug is incredibly expensive.
0:42.1	There are years of trials, failed attempts, and roughly a billion dollars in costs for
0:47.0	every new drug that we get.
0:49.6	And drug companies are not doing this research and development out of the goodness of their
0:53.3	hearts.
0:54.3	They're doing it to get rewarded before their patent expires and cheap generics flood
0:58.5	the market.
0:59.9	So on the face of it, there does seem to be this powerful link between high drug prices
1:04.6	in America and innovative medicines that the whole world benefits from.
1:09.4	But are things ever really that simple?
1:11.9	This is the indicator from planet money.
1:13.5	I'm Darian Woods.
1:14.5	To down the show, I speak with two economists who changed my thinking on drug prices and
1:19.3	innovation.
	...

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