There has been a lot of criticism of drug prices in the U.S. One person not included the chorus of critics is Bill Gates. In an interview with Bloomberg, he said:
“The current system is better than most other systems one can imagine,” Gates said in an interview on Bloomberg Television. “The drug companies are turning out miracles, and we need their R&D budgets to stay strong. They need to see the opportunity.”
Gates also called for tiered pricing to improve access to innovative drugs for patients in low-income countries. Tomas Philipson, however, says that tiered pricing may not be the best way to help patients in low and middle-income countries in the long-run.
Regarding the economics of innovation into the diseases of the poor, slashing prices of pharma will have the opposite effect on the poor patients they intend to help. It’s well understood that the reason so many individuals with HIV and other prevalent diseases go untreated globally is because there is little money to be made inventing treatments for low-and middle-income countries. For the same reason you would quickly withdraw your money if your pension fund posted negative returns, Wall Street does not invest in global health…Under altruistic care, we should all pay and innovation should stimulated, rather than discouraged, by global health policy. An ideal system has the altruism of rich countries reflected in subsidies for care. These subsidies can then provide rewards, rather than punishments, for innovators that fulfill the world’s altruistic needs.