American consumers are subsidizing other countries in the western world. We pay about 50 percent more for patented drugs--but we invest about 20 times as much in pharmaceutical R&D. This is known as the "free rider" problem. Since it is the U.S. market where new breakthrough medicines are invented and introduced, the rest of the world gets a free ride by mandating prices lower than ours. They are still higher than the drug companies' marginal production costs but below the costs necessary to recover the investment required for future research and development. And if these drugs are sent back to the United States, we become a free rider on ourselves, and that situation wouldn't last long.

[T]he National Institutes of Health advocates using a lot more drugs to achieve the result that really matters--good health. Instead of worrying about restraining or reducing drug costs, we should be focusing on staying healthier and achieving better health outcomes. That's the heart of the matter.

American consumers are subsidizing other countries in the western world. We pay about 50 percent more for patented drugs--but we invest about 20 times as much in pharmaceutical R&D. This is known as the "free rider" problem. Since it is the U.S. market where new breakthrough medicines are invented and introduced, the rest of the world gets a free ride by mandating prices lower than ours. They are still higher than the drug companies' marginal production costs but below the costs necessary to recover the investment required for future research and development. And if these drugs are sent back to the United States, we become a free rider on ourselves, and that situation wouldn't last long.

[T]he National Institutes of Health advocates using a lot more drugs to achieve the result that really matters--good health. Instead of worrying about restraining or reducing drug costs, we should be focusing on staying healthier and achieving better health outcomes. That's the heart of the matter.