Of course, how to deal with high prices of drugs, is an increasingly important issue but that is…
Henk Jan Out
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If you think the price of generics is independent of the prices for products protected by patents, that would be compelling. I don’t think that is factually correct, particularly outside of the United States, where markets for generics are influenced by the pricing contours of patented products. The cost of the system of the incentive is what we pay for drugs, in a world where they enter the market as monopolies, compared to a world where they enter the market as commodities. This cost is what should be compared to the benefits, which one metric is the money invested in R&D. What do you reckon the trillion dollar global pharmaceutical would look like, in a world where drugs began as commodities, sold under competitive conditions? But in any case, if 15 percent of turnover of the patented drugs is your stylized fact, and generics price have zero to do with patented drugs, that is still a lot of leakage, for an incentive system.

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