Do relatively high, unregulated US drug prices incentivize more innovation than in other countries?

Higher prices for drugs in the U.S. relative to other countries do not appear to be essential to sustain innovation.

A 2010 study compared the prescription drug spending and rates of drug development in 20 countries over a 12-year period. Eleven innovated at higher rates relative to spending while eight innovated at lower rates. The U.S. rate of innovation placed below average.

Northwestern University's Kellogg School looked at the impact of Medicare changes on expected profitability and research decisions by drug makers. The results led researchers to doubt claims that lower prices would hurt U.S. innovation. "That's not really true," the school's health care director said.

A 2017 study found that between 2010 and 2014 the U.S.'s drug-patent growth rate (38%) was lower than the benchmark average (47%), and far lower than China's (118%) and South Korea's (139%).