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How To Reduce the High Cost of Prescription Drugs—Without Hurting Innovation

Drug pricing expert James Love argues that getting drug prices down—while also incentivizing research—requires a new paradigm for rewarding drug companies.

Congress recently agreed to a series of modest reforms aimed at reducing the cost of prescription drugs in the U.S., where they cost far more than any other nation allows. As written, the reforms will impact a limited number of drugs, and not necessarily the most expensive ones. The paradigm that created the crisis remains intact.

Anger over high prescription drug prices is a bipartisan affair. Candidates as diverse as Donald Trump, Bernie Sanders, and Joe Biden all campaigned on popular promises to take on the drug companies and reduce the cost of drugs millions of Americans require to treat chronic conditions and life-threatening disease.

Given the overwhelming popular support that serious reform enjoys across the political spectrum, why have solutions proven so elusive over the decades? The answer, says James Love, director of the think tank Knowledge Ecology International, is a refusal to think big and challenge the incentive model that has allowed prices, profits, and R&D to become unmoored from any rational framework. In a self-reinforcing cycle, the failure to challenge this model allows the industry to tighten its grip on the political system that is tasked with finding solutions to crises like drug prices.

“You want the companies to be motivated to do research and take on risk,” says Love. “But we need more transformative reforms—we need to de-link the incentive for drug development from monopoly prices. We need new and different kinds of rewards that would result in a more rational conversation about what things should cost.”

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“If you develop a cancer drug, you should get money,” Love told Roundtable's Rob Nelson in a recent panel on drug pricing. “Billions, actually. If you bring a new drug to market, you should be paid for it. We can make the numbers big enough to incentivize innovation. But you shouldn’t get a monopoly on the product."