CBO: Impact of price control legislation on new drug development

September 2, 2021

It stands to reason that policies that aim to reduce drug prices or squeeze life science companies profits are likely to decrease incentives to finance the research and development needed to bring a drug to market. Previous estimates claim that bringing a new drug to market may cost over $2 billion, and life science companies will need to cover these cost. A key question then, is how much would potential US policies that reduce life science company returns affect new innovation. A Congressional Budget Office report aims to answer this question and finds that:

A 15 percent to 25 percent reduction in expected returns for drugs in the top quintile of expected returns is associated with a 0.5 percent average annual reduction in the number of new drugs entering the market in the first decade under the policy, increasing to an 8 percent annual average reduction in the third decade.

Read the source article at healtheconbot.wordpress.com
2021-08-30 06:33:49

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