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Notes -
This should be mandatory reading anytime we discuss drug pricing (I think on PBMs on consolidation you are likely right):
https://slatestarcodex.com/2016/09/07/reverse-voxsplaining-brand-name-drugs/
Prescription drugs are an area with real breakthoughs occurring - some of the new biologics, Harvoni/Solvadi/the Hep C drugs, a lot of the HIV/AIDS drugs, Ozempic, and so on. That is a golden goose I am very hesitant to mess with given the relatively low portion of total costs they make up. The Alzheimer's drugs may end up being an exception to this....
I like this piece, but then and now feel like he's a little too dissmissive of the "cons" side of the calculation. Study #9, for instance, estimates that European-style price regulation could decrease innovation by as much as one third. I could reply with the Kaiser Family Foundation statistic that right now one third of people can't pick up their perscriptions at all because of the cost. If we reduce innovation by a third while expanding access to existing (and still increasing) innovation by a third, I'm not so sure we actually did that badly for ourselves.
I understand the study tries to account for the access side of things, but when they say that x reduced dollars leads to x less life years, I have to ask: aren't we basically already at about the peak of how long humans live? Are these extra life years at the very tail end of someone's life, low-quality, painful years that I probably wouldn't weight as highly as people who have their whole lives ahead of them gaining better medical care now? (As one commenter pointed out, if we really value all future life years equally, then the policy responsible for "worst thing in human history" would just be contraception). I could also add that this policy suggests Americans would get thousands more in savings, and that increases in income add life years in of themselves; likewise debt is a major driver of suicide - things I don't think the study accounts for in their life year ledger.
Also (unless I'm misreading) these studies seem to be addressing actual, old fashioned price controls, not pricing negotiations, which seem less drastic - it's what PBMs already do right now and no one seems to think they decrease innovation. I could be misunderstanding though.
This isn't to say that I don't take the argument seriously; we clearly gain from innovation and there should definitely be a big financial incentive to keep pharma companies churning out drugs. I'm just not sure if we're at the reasonable cutoff. When I tried googling, for instance, if we saw more pharma patents after Trump raised the patent period by four years, I couldn't find anthing. And as Scott points out, pharma companies wouldn't need to secure returns quite so crazy high if we didn’t make them go through a $billion+ ten-year approval process first.
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