Price Controls For Drugs Stimulate Innovation

The Economist reports:

The number of Americans denouncing their president’s plans for health-care reform as unvarnished socialism would presumably rise dramatically if Barack Obama decided to institute price controls for drugs. Yet a study published this week in Health Affairs, an industry journal, suggests he should do exactly that.

The new study, written by Donald Light, a visiting professor at Stanford University, claims that European drug firms are more innovative than American ones, in spite of price controls.

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