August 1, 2014


A new pill for hepatitis C is unmasking a huge global inequality in pharmaceutical costs—one that disproportionately burdens the United States. The FT has a must-read report on Solvadi, a drug developed by Gilead Sciences that costs $84,000 for a 12-week course of treatment for American patients, but sells for a song in other countries—as low as $11 per pill in Egypt, for example. As a result, an increasingly noisy movement in America is starting to ask why this is. . . .

“Sovaldi has shone a light on the fact America is subsidising healthcare innovation for the rest of the world.”

It’s a hairy and complicated issue, and the FT article provides a detailed and nuanced look at it from many angles—it’s very much worth reading in full. But one important fact in particular stuck out at us: pharmaceutical costs account for just one out of every ten dollars spent on health care. As we don’t tire of saying, there’s much more we can do to bring down costs clean across the system, none of which involves explicit price controls.

None of these measures will address the ethical problem of other rich countries (like France, Switzerland and the UK) free-riding off of innovation financed by the more dynamic American marketplace for medicine. But picking the other, lower-hanging fruits may well make our own ailing system better and more sustainable for all Americans—something that must be our first priority anyway.

The world has been free-riding off of America for decades on many fronts; Barack Obama’s legacy may be to put an end to that. . . .