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This fact brief was originally published as an experiment to test the concepts behind fact briefs.
Readers should be aware that while there is still a lot of useful information in fact briefs like this one, not all of them reflect Gigafact's current methods and standards for fact briefs. If you come across any that you feel are out of date, don't hesitate to contact us at support@gigafact.org.

Do relatively high, unregulated US drug prices incentivize more innovation than in other countries?

By Seth Smalley
NO

Higher prices for drugs in the U.S. relative to other countries do not appear to be essential to sustain innovation.

A 2010 study compared the prescription drug spending and rates of drug development in 20 countries over a 12-year period. Eleven innovated at higher rates relative to spending while eight innovated at lower rates. The U.S. rate of innovation placed below average.

Northwestern University's Kellogg School looked at the impact of Medicare changes on expected profitability and research decisions by drug makers. The results led researchers to doubt claims that lower prices would hurt U.S. innovation. "That's not really true," the school's health care director said.

A 2017 study found that between 2010 and 2014 the U.S.'s drug-patent growth rate (38%) was lower than the benchmark average (47%), and far lower than China's (118%) and South Korea's (139%).

This fact brief is responsive to conversations such as this one.
ABOUT THE CONTRIBUTOR
Between 2020 and 2022, under close editorial supervision, Gigafact contracted a group of freelance writers and editors to test the concepts for fact briefs and provide inputs to our software development process. We call this effort Gigafact Foundry. Over the course of these two years, Gigafact Foundry writers published over 1500 fact briefs in response to claims they found online. Their important work forms the basis of Gigafact formats and editorial guidelines, and is available to the public on Gigafact.org. Readers should be aware that while there is still a lot of relevant information to be found, not all fact briefs produced by Gigafact Foundry reflect Gigafact's current methods and standards for fact briefs. If you come across any that you feel are out of date and need to be looked at with fresh eyes, don't hesitate to contact us at support@gigafact.org.
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