I would add to that list "heavy government regulation on medicine prices", they are not a common commodity and should not be left to the markets free whims.
It could be that without the US system, these drugs would not be available in European countries as well.
Mandating lower prices for drugs is unlikely to work as it hasn't worked in the past (Venezuela everything, US gasoline, etc).
See my other comment about the alleged leading of the US in drug development. Or this other article, that explains it better: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1261198/
Not sure if you are saying this generally, or you mean it as a response. I did not mean to indicate this, I believe lowering regulations and dev. costs would be beneficial but not mandating lower prices.
As an aside, I agree with you but would be interested to see if America can continue to compete in the drug market long term. Obviously, it is a big market, but with countries like China and India and their growing middle classes, if they have a more attractive development cycle with less regulation and tighter feedback I wonder if biotech would move overseas. America has really great biotech and science sectors because engineers move out of those countries here. If this stops, other markets become more attractive, and/or the patent system remains broken I would be pretty concerned.
http://www.nature.com/nrd/journal/v6/n4/full/nrd2293.html
The majority of drug research spending is in the US, and the majority of drug consumption is in the US, both per-capita and in aggregate. Once a drug has been researched and FDA-approved and can be sold in an un-price controlled market to recoup fixed costs, it's cost-effective to go ahead with approval hurdles for marginal profits in controlled markets like EU countries.
In effect, high US drug prices subsidize lower prices elsewhere.
[1]: http://content.healthaffairs.org/content/early/2009/08/25/hl...
PS: I have just found this other article that explains it way better: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1261198/
http://emoglen.law.columbia.edu/twiki/pub/LawNetSoc/BahradSo... seems to expound on a criticism of the first paper, which asserts that it muddles the data by classifying drug origin by company headquarters, rather than the market in which the research is done and the drug is first patented in. With that reclassification, their data seems to show that US-based research (though not necessarily US-headquartered companies) substantially outperforms EU-based research both in quantity of NMEs and sales.
> At first glance, the organizations with their headquarters based in European countries are characterized by a higher probability of market launch for compounds entering clinical development. However, when the composition of research portfolios is taken into account, the apparent comparative advantage of European organizations vanishes.
Your second link seems to reinforce this:
> The European Federation of Pharmaceutical Industries and Associations reported that, between 1990 and 2003, its members increased their research and development investments in Europe by 2.6-fold and in the US by fourfold
It's obviously silly to claim that all research has fled Europe (it clearly has not), but it does seem evident that European-based pharma countries are electing to research and bring to market first in the US. I think the question then is "why?" - is it the US's higher effective ceiling on drug prices? Higher per-capita drug spending? Higher probability of success through the FDA versus the EMA? What are the causes, and what are the effects?
Economic wisdom tells us that long-term price controls reliably cause shortages, either by underpricing demand and/or by disincentivizing supply; I don't think it's unreasonable to presume that the same effect would be in play to some degree here. The pharma industry is obviously extremely distorted by regulatory intervention, both in barriers to entry for a new product and barriers to entry for competition on existing products, so conventional wisdom can't be applied across the board, but I can't imagine that the effects of price controls are negligible.
I find both points of view interesting and contributing to the discussion. This is a valid dialectic between two parties. I thought HN did not downvote arguments merely because we disagreed with them, which is one of the reasons it has appeal to me.