Medical Progress Report No. 1  December 2004


Are Drug Price Controls Good for Your Health?

Figure 2: Estimates of Lost R&D Because of Government Influence on Drug Prices

Year

Predicted R&D as a Percentage of Sales (Government Share = 0)

Actual R&D as a Percentage of Sales

Cumulative Lost R&D Dollars (Millions of Capitalized 2000US$)

1960

8.19%

8.15%

$340

1965

9.36%

9.14%

$9,541

1970

9.80%

9.32%

$27,370

1975

9.91%

9.02%

$68,074

1980

9.82%

8.86%

$107,362

1985

13.54%

12.90%

$127,749

1990

15.27%

14.44%

$140,161

1995

18.91%

16.70%

$157,534

2001

19.79%

16.67%

$188,310

[figure 1] [figure 2] [figure 3] [figure 4] [appendix]