The Insightful Leader
Insight Unpacked S2E4 | The Bargain That Fuels Big Pharma
Jul 15, 2024
Join Amanda Starc and Craig Garthwaite from Kellogg School of Management, alongside Kevin Outterson from Boston University, as they delve into the economics of drug pricing and its impact on innovation. They discuss Medicare's new negotiating powers, the financial labyrinth of antibiotic development, and the challenges pharmaceutical companies face when balancing public health needs and sustainable business models. The conversation reveals the complex trade-offs between affordability and medical advancements that define modern healthcare.
26:04
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Quick takeaways
- Medicare's new authority to negotiate drug prices aims to lower costs for millions but may threaten future pharmaceutical innovation.
- The high cost and lengthy process of drug development necessitate significant profits, making price reduction strategies potentially harmful to new drug discoveries.
Deep dives
Medicare's New Drug Negotiation Powers
Medicare now has the authority to negotiate the prices of certain prescription drugs, which is expected to benefit over 9 million Americans. Previously, Medicare was unable to negotiate with drug manufacturers, placing it at a disadvantage compared to private insurance companies. This change aims to reduce costs for essential medications used to treat various health conditions, including diabetes and heart failure. While this is seen as a favorable development in the short term, some experts caution that it may have unintended long-term consequences.
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