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Commentary

The High Cost of Cheap Drugs
Jacob Arfwedson, Wall Street Journal Europe, 12-13-04

Arfwedson reminds his European readers of a painful truth: the once-innovative European pharmaceutical industry is a shell of its former glory. Why? “Price controls and reimportation.” Thanks to these two policies EU pharmaceutical companies have seen their global market share for R&D shrink from 32% to 22% over the last decade. The big winner from these socialist-inspired policies is not the European consumer, but the U.S., which has experienced a windfall in biotech and pharmaceutical investment during the same period and where more new drugs are now first launched than anywhere else in the world.

Unfortunately, U.S. policymakers at both the state and federal level are not letting Europe’s failed experiment deter their efforts to bring price controls and reimportation to the U.S. Arfwedson warns Americans that the “short term benefits [of these policies] are likely to be outweighed by the negative longer-term effects of approving price controls. Reimportation may be good for politicians re-election chances, but not for the health of their constituents.”



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