I saw your comment. Clearly, there is a lot of waste, and we both agree on that front. As for exogenous costs, the U.S. isn't the only country with expensive real estate. Almost all of the other OECD countries have a modest degree of real estate cost inflation. Similarly, most should exhibit a similar degree of adherence to the Baumol Cost Disease phenomenon. There is no reason that the U.S. healthcare industry should have a 50-70% higher magnitude of exogenous cost disease. Lastly, I already addressed direct R&D funding (my analogy was simplified, but it could be extended to a portfolio of drugs). However, you mentioned that U.S. purchasing of equipment and drugs disproportionately funds R&D activity. I'm sure that's true, but I see it as a problem to be solved rather than a fact of life. We should adopt universal healthcare just like almost every other developed nation, implement measures to mitigate incentive loss, wait for U.S. medical companies to renegotiate pricing with other countries, and, if incentives are still lacking, we can deal with that then. Surely there's enough money among all developed nations to more than pay for an adequate level of medical R&D.
Somewhat related, but Jennifer Doudna, a government employee, co-discovered CRISPR. CRISPR will prove to be one of the biggest step changes in health outcomes in the history of mankind, or, at some point, supermankind. Now hundreds of pharma companies will try to monetize on the government’s discovery: CRISPR for sickle-cell anemia, CRISPR for congenital retinal defects, CRISPR for lactose intolerance, etc... Should we have to reimburse drug companies for the value of the drug, or should we, recognizing the government’s contribution and the immense value of life, put a reasonable cap on reimbursement? I say the latter. A company developing CRISPR drugs is on record saying they plan to charge over $100,000 for their treatment. I’m not convinced that the drug would not have been developed if they stood to make much less than that per person. We trust the government to grant 20 year monopolies on drugs, and I believe we can also trust the government to reasonably modulate drug reimbursement without ruining incentives for development.
Somewhat related, but Jennifer Doudna, a government employee, co-discovered CRISPR. CRISPR will prove to be one of the biggest step changes in health outcomes in the history of mankind, or, at some point, supermankind. Now hundreds of pharma companies will try to monetize on the government’s discovery: CRISPR for sickle-cell anemia, CRISPR for congenital retinal defects, CRISPR for lactose intolerance, etc... Should we have to reimburse drug companies for the value of the drug, or should we, recognizing the government’s contribution and the immense value of life, put a reasonable cap on reimbursement? I say the latter. A company developing CRISPR drugs is on record saying they plan to charge over $100,000 for their treatment. I’m not convinced that the drug would not have been developed if they stood to make much less than that per person. We trust the government to grant 20 year monopolies on drugs, and I believe we can also trust the government to reasonably modulate drug reimbursement without ruining incentives for development.