US Price Intervention: Will Drugs Soon Become More Expensive Here?

US Price Intervention: Will Drugs Soon Become More Expensive Here?

In the US there will be, for the first time, drug price regulation. This could inhibit innovation. IHS economist Thomas Czypionka warns that prices in Europe could also rise.

The pharmaceutical lobby has a lot to say in the US. The industry is politically very well connected and is one of the biggest donors to the two main parties – the Republicans and the Democrats. In the past, generous involvement in American politics has paid off. The US has the highest per capita drug expenditure in the world, nowhere else in the world is it more prescribed than in the land of supposedly limitless possibilities.

From a purely economic point of view, previous US governments had every reason to court the pharmaceutical industry, by 2021 nearly a trillion US dollars were sold worldwide with prescription generics and original preparations. With a market volume of over 500 billion dollars, the US is by far the most important pharmaceutical market. Six of the world’s ten largest pharmaceutical companies are headquartered in the United States.

Souvenir for the pharmaceutical industry

With the latest bill, which passed the US Senate on Sunday, the US pharmaceutical industry received “a first small lesson”, as the “NZZ” recently emphasized. Thus, the price of prescription drugs will soon be restricted. After tough negotiations, the package is just a fraction of what the US president really wanted to achieve on climate and social issues. The fact that the market, until now completely unregulated in terms of prices, is being attacked is also a clear sign in the direction of the pharmaceutical giants.

Government intervention in drug pricing is a first in the US. In the past, the US pharmaceutical industry has successfully defended itself against such attempts. If the income is too low, the costs for developing new drugs can no longer be covered, hence the argument of the powerful industry. In fact, nowhere else does the industry invest so much money in research and innovation. Most of the economic research bill was paid by the local population through high local prices.

IHS health economist Thomas Czypionka is partially critical of the planned intervention by US policymakers. There is a risk that investments will be reduced as a result. “Without the higher prices, high margins are harder to achieve.” Especially during patent protection, however, these are “an important incentive to accept the high risk of drug development and the high costs involved”.

High drug prices as a political issue