A study in the June issue of the American Journal of Public Health found that the higher prices U.S. consumers pay for brand name prescription drugs do not result in higher rates of new drug development by U.S. pharmaceutical companies.  The study examined economic factors in countries that produce pharmaceuticals and all new drugs approved by the U.S. Food and Drug Administration (FDA) between 1992 and 2004 by country of origin.  The authors found that the U.S. does not produce a disproportionate share of the innovation in the pharmaceutical market, even though U.S. consumers pay a disproportionate share of worldwide spending on prescription drugs.  The study noted that many countries that utilize price controls on prescription drugs contribute significantly to the development of new pharmaceuticals, challenging the assumption that the lack of price controls in the U.S. leads to greater drug manufacturer innovation.  

Keyhani, S., et al. (2010). US pharmaceutical innovation in an international context. American Journal of Public Health, 100(6): 1075-1080. doi: 10.2105/AJPH.2009.178491 http://ajph.aphapublications.org/cgi/content/abstract/100/6/1075?maxtoshow=&hits=10&RESULTFORMAT=&fulltext=cost+controls+innovation&searchid=1&FIRSTINDEX=0&sortspec=relevance&resourcetype=HWCIT 

Authors: Salomeh Keyhani, Steven Wang, Paul Hebert, Daniel Carpenter and Gerard Anderson