Lower drug prices in Europe have not restricted R&D investment, according to an article recently published in the British Medical Journal. The piece refutes longstanding claims in the US that the drug industry in Europe is "free-riding."
According to recent research, drugmakers in the UK actually invest proportionally more of their revenues from domestic sales in R&D than their US counterparts. Meanwhile, R&D spending as a percentage of GDP is higher in the UK, Sweden and Switzerland than in the US. The report goes onto say that despite lower prices, drug companies in these countries continue to recoup costs and make healthy profits.
This contradicts claims by many major multinationals that market pressures force them to set prices at 50100 times production costs. In truth, their case can never be substantiated, as they do not open their books to independent analysts.
Meanwhile, a recent report from the US Department of Commerce claims that price controls in Europe can be achieved, at no cost to governments, through the greater provision of generic drugs.