STAT November 14, 2023
The announcement by the Center for Medicare and Medicaid Services that ten drugs will be subject to price negotiation under the Inflation Adjustment Act has unleashed a storm of debate. Most observers agree that the negotiations will reduce spending for both consumers and taxpayers. The real dispute centers on whether the prospect of price negotiations will reduce future innovation by shrinking the expected future profits for patented drugs. But this debate sidesteps the larger issue of whether the patent system delivers the value it should in health care.
There is little doubt, and much evidence, that innovators respond to expected future profit. People are drawn to problems for which the rewards are great. We have seen this in our own...
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