“The U.S. system for pricing drug innovation is forged on a careful balance between innovation and access. On the whole, American consumers consent to market-based pricing for novel drugs as a way to drive investment and reward scientific success. But no system is optimal. Too many patients struggle to obtain access to the resulting breakthroughs. Healthcare costs are straining public and private budgets.
We’ve maintained a fragile political consensus that has long accepted that our market-based model is a suitable compromise for steering capital to the highest reward and also highest-risk endeavors. That political balance is becoming more frayed, at the very moment when the results of these endeavors — measured by new advances — are enormous. We’ve entered an age of unmatched medical breakthroughs, where the opportunity to cure once intractable and deadly diseases is firmly at hand. But our market-based approach needs to be modernized to work better for more consumers and sustain the fragile compact that supports it.
These market-based rewards for innovation are balanced against an expectation that there will be vigorous competition from low cost, generic drugs once patents and other exclusivities have lapsed on the branded medicines. That careful compromise mostly worked for many years. But this implicit bargain faces new strains that are contributing to the growing angst over the rising cost of novel drugs.”
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