Frank, Ginsburg: Is More Innovation Always a Good Thing?


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The authors of a Health Affairs blog post published Monday are taking jabs against the pharmaceutical industry’s most common argument in favor of rising drug costs: lower prices will lead to less innovation.

Richard Frank and Paul Ginsburg say the argument, to an extend, does hold water — that less revenues will result in less research and development investments.

They question, however, the “premise that more innovation is a good thing.”

“A central tenet of economics is the law of diminishing returns,” Frank and Ginsburg write. “In this case, additional resources going into innovation inevitably yield fewer important breakthroughs. At some point, perhaps already reached, the yield from additional resources going into R&D no longer justifies what society is paying in the form of higher prices to support this.”

Click here to read the full write up on Health Affairs.