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Today, the Council of Economic Advisers (CEA) released a report on how the government can help to effectively reduce the prices of lifesaving drugs while stimulating innovation in the pharmaceutical industry. Please see below for the executive summary and read the
full report here
The affordability of healthcare and biopharmaceutical drugs is a top concern for Americans. It is often asserted that promoting innovation and affordable drugs are conflicting goals. New innovations, however, often provide improved health that was not previously available at any price or obviate the need for more costly care. They thereby lower the effective price of health down to the price of the patented drugs, and later down to the price of generic drugs. Federal policies that affect drug pricing should satisfy two goals. First, domestic drug prices paid by Americans should be reduced. Second, the price of better health in the future should also be reduced by spurring medical innovation. This report considers policy options to simultaneously advance these two seemingly conflicting goals.
Reducing drug prices that Americans pay means recognizing that many artificially high prices result from government policies that prevent, rather than foster, healthy price competition. Drug prices, for example, are sometimes artificially high due to government regulations that raise prices. This report discusses changes to the Medicare and Medicaid programs that could help lower domestic prices, as well as reforms to the Food and Drug Administration (FDA) that could encourage more robust price competition.
The affordability of healthcare and biopharmaceutical drugs is a top concern for Americans. It
is often asserted that promoting innovation and affordable drugs are conflicting goals.
New innovations, however, often provide improved health that was not previously available at any
price or obviate the need for more costly care. They thereby lower the effective price of health down to theprice of the patented drugs, and later down to the price of generic drugs.