Healthcare Economist August 4, 2024
This is a common question I receive, often with the implicit assumption that prices in the US are too high. One key question to consider is, what are we trying to optimize? Tyler Cowen has a very good and brief post talking about drug prices and makes the case that (i) the supply of new drugs is elastic and (ii) we want to expand the number of new, high-value drugs that come to market. I’ve excepted the full piece below as I believe it merits a full excerpt.
Recently I have been writing about how the federal government should not go further in bargaining or forcing down the prices of pharmaceutical drugs. Supply is elastic and the benefits from...
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