Germany Wants Cheaper Drugs—And Americans To Pay The Difference

FORBES

What does a new healthcare reform effort in Germany have to do with American patients? Quite a lot, actually.

The German government is looking to cut healthcare spending by tens of billions of euros. To that end, it is pushing pharmaceutical companies to accept significantly lower prices for new medicines.

That may help Germany balance its books. But it comes at a cost to American patients and pharmaceutical innovation. It’s also fundamentally unfair to the United States.

Germany’s approach to drug pricing is a textbook example of how developed nations shift the cost of medical progress onto American patients.

At the heart of the problem is a basic economic reality. Drug development is extraordinarily expensive. It takes roughly $2.7 billion, on average, to successfully bring a drug to market. It’s also risky, as roughly 90% of drugs that enter clinical trials never make it to patients.

This system only works when drug companies are free to sell the few drugs that successfully make it at prices that reflect this enormous risk and upfront cost.

Foreign price controls make that impossible.

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