JAMA Network Open Paper Finds “No Relationship” Between Drug Company’s Prices and Investments in Research and Development

On Monday, a new paper published in JAMA Network Open examines Big Pharma’s bogus claims that high prescription drug prices are justified by the amount of research and development (R&D) brand name drug companies invest to bring new products to market. The paper, authored by Olivier Wouters, Assistant Professor of Health Policy at the London School of Economics and Political Science and researchers from the Skaggs School of Pharmacy and Pharmaceutical Sciences at University of California San Diego, found “no relationship” between the price brand name drug makers set and the amount those companies invest in R&D for those drugs.

The researchers examined a subset of 63 new drugs approved by the U.S. Food and Drug Administration (FDA) from 2009 to 2018, for which research and development data was publicly available, and compared this to the available list prices for those drugs. The researchers chose this set of drugs – representing around one-fifth of the drugs approved by the FDA during this time span – because they were the only FDA-approved drugs for which research and development data was available. Ultimately, the researchers found “no correlation” between these sets of data.

The authors argue that the findings are important for policymakers because it debunks Big Pharma’s argument that high prescription drugs prices are justified by the amount companies invest in R&D. As the study’s authors point out, “if research and development costs justified drug prices, an association between the two variables would be found.” More importantly, the authors argue that pharmaceutical companies set prices in the U.S. based on the highest price they think they can charge: “pharmaceutical firms aim to maximize profits based on consumers’ willingness to pay… in the US, drug companies charge what the market will bear.”

This is only the latest evidence debunking Big Pharma’s bogus innovation rhetoric. Policymakers must continue to see through the pharmaceutical industry’s smoke and mirrors excuses and advance market-based solutions that hold brand name drug makers accountable to lower prescription drug prices.

Read the full paper in JAMA Open Network HERE.

Read more about Big Pharma’s bogus claims that high R&D costs justify high prescription drug prices HERE.

Learn more about bipartisan, market-based solutions to hold Big Pharma accountable HERE.

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