Joe Paduda spanks the Manhattan Institute:
Conservative think-tank Manhattan Institute is the source of these statistics, which are based on their analysis of the financial impact on big pharma if CMS adopts the VA's pricing. The analysis is based on a faulty premise, uses a flat-out wrong methodology, and produces results that are, in a word, hysterical.
MI's lead expert, economist Benjamin Zycher, claims that drug companies would lose the incentive to do research if the Feds based their prices on the VA, and investment in new drug research and development would (therefore) decline by approximately $10 billion per year. In turn, this would mean about 10 fewer drugs per year.
In all of his research efforts, Zycher evidently did not bother to look at pharma investment in Europe, where countries negotiate for drugs directly with manufacturers (like the VA does, and restrict the formularies to boot). As a result their costs for brand drugs are about 60% of US costs. One would think that European pharma companies would therefore spend less on R&D. And one would be wrong; there's more investment by European companies, not less.
