Abstract:

It has been speculated by many economists that the ultimate effect of government-imposed price regulation of the pharmaceutical industry would be a decrease in R&D investment. This article affirms that these conclusions hold true in the short-term, but also notes that no study thus far has, with use of any scientifically-accepted methodology, tested the long-term effects of price controls on R&D investment. On that point, this article concludes that, in the long term, R&D investment as well as pharmaceutical company profits and drug innovation will see significant increases. As a result, patients will experience better health outcomes due to the combined effect of higher drug accessibility from price controls and more innovative solutions, produced by the long-term increase in R&D investment and quality.