Placeholder Banner

Kenneth Thorpe: America Subsidizes Medical Innovation for World

October 15, 2014
Kenneth Thorpe, chairman of the Partnership to Fight Chronic Disease and a former deputy assistant secretary for Health Policy at HHS, wrote a post for The Hill this week pointing out what is left unstated in many current discussions about the price of innovative medicines and treatments: other nations aren’t paying their fair share for medical advancements, driving up the costs here at home:
Patients throughout the globe benefit from the pharmaceuticals, medical devices and innovative treatment approaches developed by U.S.-based manufacturers and healthcare providers, but pay less for them because their countries make liberal use of government price controls.

Is it fair that other nations don’t pay their share for the drugs, devices and treatments that yield longer and healthier lives? Of course it’s not. Should this be a priority in trade negotiations between our government and their counterparts in other capitals, ensuring that prices are set by the market and not by arbitrary price ceilings? Certainly. Spreading the financial responsibility for innovation among all those who benefit from it would lead to more equitable pricing worldwide and greater benefit ultimately.

Until that occurs, though, it’s foolhardy to point a finger at just one healthcare sector, and blame it for the high price of modern medicine. The fact is that pharmaceuticals represent around 10 percent of the nation’s total healthcare spending – and have been for more than 40 years. The drugs administered for a host of diseases, from cancer to diabetes to heart disease, many times actually save money by preventing more expensive acute procedures. Given that the primary outcomes of medical innovation are longer life, less disability, and better quality of life, it perplexes me that these benefits are almost always ignored in the analysis of prices of any number of medical goods and services.

Read the full piece here: