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The common trope is that European price controls hinder innovation in pharmaceuticals [1]. I've read that American pharmaceutical firms spend 4x in R&D per capi

The common trope is that European price controls hinder innovation in pharmaceuticals [1]. I've read that American pharmaceutical firms spend 4x in R&D per capita than European counterparts. Counterpoints? [1] https://www.nature.com/articles/nrd2293 https://www.nature.com/articles/nrd2293

bildung 7y ago
The 4x spend on research per capita seems to be true. I looked into that before and found that the absolute spend is about $59 billion in the US and probably about $30 billion in the EU [0,1]. With the US population at 327 million and the EU population at 514 million the 1:4 factor seems about right. But there is another factor which IMO is important: The domestic spend on pharmaceuticals. The US healthcare system seems to be more pharmaceutical friendly. Yearly US spend on pharmaceuticals alone is about $330 billion [2], while yearly EU spend on "medical goods", which I assume to include pharmaceuticals, seems to be only €120 billion [3]. So pharmaceutical spend per capita is also about 1:4 when compared to the EU, not just R&D. As production usually follows consumption (which is why e.g. every US and EU car producer has domestic factories in China), one could also argue that the high US health care costs are the reason why so many US pharma companies exist. [0] https://www.healthaffairs.org/do/10.1377/hblog20170307.059036/full/#one https://www.healthaffairs.org/do/10.1377/hblog20170307.05903... [1] https://www.vfa.de/download/the-pharmaceutical-industry-in-germany.pdf https://www.vfa.de/download/the-pharmaceutical-industry-in-g... [2] https://www.actuary.org/content/prescription-drug-spending-us-health-care-system https://www.actuary.org/content/prescription-drug-spending-u... [3] https://ec.europa.eu/eurostat/statistics-explained/index.php/Healthcare_expenditure_statistics https://ec.europa.eu/eurostat/statistics-explained/index.php...
- rayiner 7y ago
  OECD tracks pharmaceutical spend directly. It’s about $1,200 per capita in the US, versus about half that in say Spain or France. https://data.oecd.org/chart/5OrU https://data.oecd.org/chart/5OrU. Richer countries like Australia, Canada, and Switzerland spend $850+.
  - bildung 7y ago
    Thanks! Way better source.
frobozz 7y ago
Size of spend by pharmaceutical firms does not necessarily indicate more or better R&D is going on. Factors that could reduce such spending without impacting research output include: * Lower costs (e.g. salaries for early career researchers don't have to be as large to cover their university debt). * More research done in publicly funded universities or other research institutions (including where a pharma firm funds a project). * Better cooperation between companies (e.g. Research Council joint programmes). * Better controls against overspending on dead-ends (cultural or legal). * Different reporting on what, exactly, counts as "R&D" spending (e.g. does everything a researcher does at work count as Research? Does maintenance of research facilities count?) I'm not saying that all of these represent the actual difference. I'm just saying that using spend in a given sector as a proxy for output seems a bit odd.
- throwawaymanbot 7y ago
  100%
s1artibartfast 7y ago
I don't understand how researchers can meaningfully separate European and US RND. The pharmaceutical Market is international and both us and European companies expect to commercialize in both regions

bildung 7y ago

The 4x spend on research per capita seems to be true. I looked into that before and found that the absolute spend is about $59 billion in the US and probably about $30 billion in the EU [0,1]. With the US population at 327 million and the EU population at 514 million the 1:4 factor seems about right. But there is another factor which IMO is important: The domestic spend on pharmaceuticals. The US healthcare system seems to be more pharmaceutical friendly. Yearly US spend on pharmaceuticals alone is about $330 billion [2], while yearly EU spend on "medical goods", which I assume to include pharmaceuticals, seems to be only €120 billion [3]. So pharmaceutical spend per capita is also about 1:4 when compared to the EU, not just R&D. As production usually follows consumption (which is why e.g. every US and EU car producer has domestic factories in China), one could also argue that the high US health care costs are the reason why so many US pharma companies exist. [0] https://www.healthaffairs.org/do/10.1377/hblog20170307.059036/full/#one https://www.healthaffairs.org/do/10.1377/hblog20170307.05903... [1] https://www.vfa.de/download/the-pharmaceutical-industry-in-germany.pdf https://www.vfa.de/download/the-pharmaceutical-industry-in-g... [2] https://www.actuary.org/content/prescription-drug-spending-us-health-care-system https://www.actuary.org/content/prescription-drug-spending-u... [3] https://ec.europa.eu/eurostat/statistics-explained/index.php/Healthcare_expenditure_statistics https://ec.europa.eu/eurostat/statistics-explained/index.php...

rayiner 7y ago
OECD tracks pharmaceutical spend directly. It’s about $1,200 per capita in the US, versus about half that in say Spain or France. https://data.oecd.org/chart/5OrU https://data.oecd.org/chart/5OrU. Richer countries like Australia, Canada, and Switzerland spend $850+.
- bildung 7y ago
  Thanks! Way better source.

frobozz 7y ago

Size of spend by pharmaceutical firms does not necessarily indicate more or better R&D is going on. Factors that could reduce such spending without impacting research output include: * Lower costs (e.g. salaries for early career researchers don't have to be as large to cover their university debt). * More research done in publicly funded universities or other research institutions (including where a pharma firm funds a project). * Better cooperation between companies (e.g. Research Council joint programmes). * Better controls against overspending on dead-ends (cultural or legal). * Different reporting on what, exactly, counts as "R&D" spending (e.g. does everything a researcher does at work count as Research? Does maintenance of research facilities count?) I'm not saying that all of these represent the actual difference. I'm just saying that using spend in a given sector as a proxy for output seems a bit odd.

throwawaymanbot 7y ago
100%

s1artibartfast 7y ago

I don't understand how researchers can meaningfully separate European and US RND. The pharmaceutical Market is international and both us and European companies expect to commercialize in both regions