Press Release

New Analysis Confirms Government Price Setting Leads to Reduction in R&D Investment and Delayed Access to Medicines

WASHINGTON, D.C. (November 23, 2021) – A new analysis out today adds to a growing body of research showing that government price setting has a devastating impact on biopharmaceutical research and development and places an additional barrier between patients and innovative medicines. The analysis – conducted by Vital Transformation and commissioned by the Pharmaceutical Research and Manufacturers of America (PhRMA) and Biotechnology Innovation Organization (BIO) – confirms that government intervention that forces medicine prices artificially low threatens access to medicines and discourages investment in drug development.

The new analysis looked at the impact of government price setting on the European biopharmaceutical ecosystem and concluded that government price control policies correlate to less R&D and, consequently, less access to medicines. Specifically, the analysis found that in markets relying on government price setting, every 10% reduction in medicine prices resulted in:

  • A 14% decrease in total venture capital funding (10% decrease in early-stage research funding and 17% decrease in late-stage research funding)
  • A 9% decrease in biotech start-up funding relative to the United States
  • An 8% increase in the delay of access to medicines

According to the analysis, the continued downward pressure on prices in Europe has led to declines in biopharmaceutical industry investments in the Europe Union relative to the United States. For example:

  • By 2019, late-stage venture capital funding in the European Union was just 3% of the level in the United States
  • From 2003 to 2019, biotech investments in the United States increased sixfold, while they remained static in the European Union
  • In 2020, the U.S. share of total annual biotech startups was roughly three times greater than the EU share

Despite overwhelming evidence that patients are negatively impacted by government price setting, policymakers in Washington, DC, are hyper-focused on implementing government price setting under the guise of government “negotiation.” This new analysis paints a stark picture of what could happen to patients and innovation in the United States if drug pricing plans that rely on government price setting become law.

Jenny Bryant, PhRMA’s Executive Vice President of Policy and Research, explained: “This new analysis confirms the pattern we see around the world that when governments set prices for medicines, patients lose out and wait longer for new treatments. Economies suffer as well, because investment and jobs move to other countries, as we’ve witnessed in Europe over the last several decades. Despite these risks, government price setting is a key component of the drug pricing plan being considered by Congress. Instead, policymakers should focus on policies that lower patient costs without sacrificing innovation.”

John Murphy, BIO’s Chief Policy Officer, made the following remarks: “The findings in this report show that government price controls drastically hinder the discovery of innovative therapies for patients. Concerningly, government price controls would have a disproportionate impact on small biotech firms. These businesses, which are responsible for developing a large percentage of new drugs and treatments, rely on a healthy innovation ecosystem and steady flow of investment to survive. I hope lawmakers will consider these findings and their subsequent negative impact on American patients when weighing any future drug pricing proposal.”

Rather than playing politics and forcing through a drug pricing plan without considering the significant negative impacts to biomedical innovation and patients, policymakers should instead develop and implement commonsense, patient-centered policies that would address affordability concerns.

The full analysis can be found here.

About PhRMA

The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the country’s leading innovative biopharmaceutical research companies, which are devoted to discovering and developing medicines that enable patients to live longer, healthier and more productive lives. Since 2000, PhRMA member companies have invested more than $1 trillion in the search for new treatments and cures, including $91.1 billion in 2020 alone.

For information on how innovative medicines save lives, please visit:

About BIO

BIO is the world’s largest advocacy association representing member companies, state biotechnology groups, academic and research institutions, and related organizations across the United States and in 30+ countries. BIO members are involved in the research and development of innovative healthcare, agricultural, industrial and environmental biotechnology products.

For more information, please visit:

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