By NextBestFitSlower access to new drugs and technology
Systems with strict value assessment (UK NICE, Germany AMNOG, NZ PHARMAC) pay less but sometimes delay or refuse new drugs; lower U.S. prices would reduce global R&D.
Evidence
- Lower prices reduce the number of new drugs over time.Sources: Congressional Budget Office (2019)
Who's affected
- People with ongoing or specialist care needs: Strict value assessment can delay or refuse new therapies.
- Drug and device makers: Lower prices reduce research returns for biotech workers and investors.
- Taxpayers and public budgets: Strict value assessment lowers payment for new products in the short run.
- Health insurers, brokers, and their shareholders: Strict value assessment lowers payment for new products in the short run.
Under your mix of paths
- Price cuts without replacing R&D incentives
Related costs
Open questions
- How much innovation loss is acceptable for lower prices, and how can R&D be funded differently?
Caused or worsened by these paths
This problem only matters if one of these paths is chosen.
National price negotiation lowers manufacturer revenue, which may reduce some research and development.
Limiting patents and exclusivity extensions may reduce rewards for incremental innovations such as new drug forms.
Licensing patents to other manufacturers weakens patent certainty for investors.
Scientific peer review can be conservative even with funding reserved for high-risk research.
Solution paths (3)
Open a path for what it fixes, what it creates or worsens, who gains and who loses, precedents, and how it connects to other paths. See all paths as a decision tree.
New drugs and devices are covered immediately at a provisional price while evidence is collected; the price is reset after one or two years.
- +Slower access to new drugs and technology
- −Depends on uncertain evidence or judgments
- −Faces political, industry, or legal opposition
A fixed share of savings from price negotiation goes to public research and late-stage trials.
- +Slower access to new drugs and technology
- −Solves only part of the problem
- −Government chooses which research gets funded
Accept that negotiation and assessment delay some new treatments, as in peer countries, in exchange for lower prices.
- +Brand-name drug prices far above production cost
- +Low-value care and overtreatment
- −Reduces income or business for affected groups
- −Central coverage decisions can feel like rationing
Also addressed by paths for other problems
Making favorable prices conditional on prompt launches helps prevent delays in access to new products.