Top of Mind

Is There a Market Failure in the Prescription Drug Industry?

A Senate hearing on soaring drug prices heard testimony that “competition had dried up, resulting in a broken system that allowed some older drug prices to spiral out of control in ways that called for government to intervene,” according to the Washington Post.

However, some see government intervention as the source of the problem. In Wired, Princeton economics professor Uwe Reinhardt described drug companies as the antithesis of free-market actors; rather, he said, they are “fragile little birds that the protective hand of government carefully shields from the harsh vagaries of truly free, competitive markets.” Wired pointed to a number of tools that calculate prices for drugs based on the value they deliver.

Yale Insights talked with Clive Meanwell, CEO of The Medicines Company, about the challenges that pharma faces and Meanwell’s vision for a new economic model.