MedEcon: A Serious Drug Problem

Krugman's latest:

Needless to say, apologists for the law insist that the prohibition on price negotiations had nothing to do with catering to special interests - that it was a matter of principle, of preserving incentives to innovate. How can we refute this defense?

One way is to challenge claims that the pharmaceutical industry needs high prices to innovate. In her book "The Truth About the Drug Companies," Marcia Angell, the former editor in chief of The New England Journal of Medicine, shows convincingly that drug companies spend far more on marketing than they do on research - and that much of the marketing is designed to sell "me, too" drugs, which are no better than the cheaper drugs they replace. It should be possible to pay less for medicine, yet encourage more real innovation.