Cutting pharmaceutical prices can hamper new drug development, ESMT study shows

Cutting pharmaceutical prices will severely reduce the number of new medications making it to market, according to a groundbreaking independent study from Berlin, Germany-based ESMT Competition Analysis (ESMT CA).

For the first time, the study on Pharmaceutical Innovation and Pricing Regulation ' which was commissioned by Swiss drug major Novartis - clearly models and quantifies the direct link between strict regulation and low innovation. New medications likely to be hit hardest under tough pricing regulation include antibiotics, as well as treatments for cardiovascular disease and immune system disorders such as multiple sclerosis and chronic meningitis.

'Our study shows the consequences that pricing and reimbursement regulation can have on pharmaceutical innovation. It also shows that, incorrectly applied, regulation can reduce the value of pharmaceutical projects and curtail the resources available to carry them out,' said Hans Friederiszick of ESMT CA. 'Rational investors will naturally look for the most profitable investment choices, which is why regulation has a direct impact on the number and characteristics of the medications developed,' he added.