In 2012, the percentage of money spent on providing drugs to patients in the United States continued to rise (Hoffman et al., 2012). However, this is a US trend not seen in other developing countries – such as Canada – where national drug expenditure percentages are slowing year after year (CBC News, 2012). In fact, in Canada, the rate of drug cost growth for this year is the lowest of the last 15 years.
So, why? Simply put, the American pharmaceutical industry has fueled new drug innovation worldwide for decades. Now, the pharmaceutical companies have less money for research and development and are innovating less. When they do innovate, the companies spend their R&D allocations either on “me too” (imitation) drugs, or very, very expensive drugs for which insurance reimbursement is maximized. Market forces drive both these new drug lines. But now, the R&D well is clearly drying up (Adams, 2011).
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