The companies where pharma innovation is happening
Plus: Nuclear power is making a comeback; inflation is as high as you thought; and why we should care about presidential poverty platforms
Small pharma innovates better than big pharma: Prescription drug prices in the U.S. are higher than anywhere else in the world, and the gap widens each year thanks to price increases from large manufacturers. Although these companies claim the high prices are necessary for innovation, FREOPP scholars have demonstrated that small companies—not large companies—develop most new medicines. We recently added to that body of research with a new paper by FREOPP Resident Fellow Gregg Girvan. Gregg reviewed 428 FDA drug approvals and financial data from more than 4,000 companies. His findings? Most new drug development occurs in startups with little to no commercial revenue, and these companies can bring drugs to market without the help of Big Pharma. Overall, they innovate more while earning less and spending less on research and development. That means that policies that curb high prices on older drugs could make life-saving medicines more affordable, without harming innovation.
→ In other health care news, in January the Centers for Medicare & Medicaid Services published advance notice of a forthcoming payment cut to Medicare Advantage. Coming at a time of elevated inflation and rising health expenses, the move invites scrutiny, which FREOPP President Avik Roy provided this month in Forbes.
The long-awaited nuclear-energy revival shows progress: As nations grapple with the costs of their net-zero carbon emissions goals—which will fall hardest on their most economically disadvantaged citizens—many are demonstrating a renewed interest in and support for nuclear-energy development. In National Review, FREOPP Visiting Fellow Jon Hartley describes how nuclear disasters such as Chernobyl and Fukushima shaped attitudes toward nuclear power, setting growth back by decades. But the tide is turning: In 2020, the Democratic Party platform endorsed nuclear power for the first time since the 1960s, and California recently postponed closure of its last remaining nuclear power plant. With big technology companies like Amazon beginning to invest in nuclear power for their projects, the demand is only likely to grow. That makes regulatory changes that facilitate an increase in nuclear electricity generation (including FREOPP’s proposed reforms to the Nuclear Regulatory Commission) more urgent than ever.
Summers: Inflation reached 18% in 2022 using the government’s previous formula: Americans continue to report that inflation is among their top concerns heading into the 2024 election, despite assurances from experts that inflation is declining and the economy is doing great. Why the disparity? As Avik put it in Forbes last week, inflation is a judgment call, not an objective measure. His argument builds on new research from former Treasury Secretary Larry Summers and economists from Harvard and the International Monetary Fund, which indicates that Americans correctly factor rising interest rates into their perception of inflation and that by reintegrating interest costs into the Consumer Price Index, inflation could be as high as 18%. The widening gap between official measures and consumer experiences underscores the need for a broader debate on inflation measurement methods, especially considering its disproportionate impact on low-income individuals.
Will Biden or Trump talk about poverty? As Americans prepare for a rematch between President Biden and former President Trump, FREOPP Senior Fellow Michael Tanner makes the case for a candidate debate on poverty policy differences. Although low-income voters are not a powerful voting block, how we handle poverty is a pressing issue for all Americans. The federal government will spend more than $1.1 trillion to fund more than 130 anti-poverty programs this year alone, but millions still struggle financially. The stakes are too high for policymakers to ignore, and it is time for current lawmakers and candidates alike to ask hard questions about whether today’s policies are actually working, or whether policymakers need a completely different approach to fighting poverty.
Subscribe to FREOPP’s OPPBlog to follow Michael’s ongoing analysis of presidential candidates’ records and policy proposals on poverty.
Want a debate about specific anti-poverty policies while we wait for the candidates to catch up? Check out FREOPP Visiting Fellow Aparna Mathur’s discussion of paid parental and medical leave on the Future of Freedom podcast.
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