America subsidizes the health care of the entire world. Because such a large portion of health profit comes from the US. If the US ceased to exist then global prices would increase and global research would decrease.
I hear this line repeated a lot on HN (it appears multiple times in this thread even), yet I've never seen a study or any hard evidence for it. How do you know that the massive profits made by drug companies in the US are being reinvested into drug development, and not simply returned to their sharedholders? Do you have any sources for this claim?
Plenty of research on this topic and hard evidence abounds.
Regarding US share of research funding versus the rest of the world, this is well established... Public funding and private profits are the two big US sources of medical research dollars. The NE Journal of Medicine reports that the US funds about half of all global medical research spending, and that's split approximately evenly between public and private funding.
Here's [1] a CBO paper on the topic of pharma R&D spending / reinvestment which is also worth a look. R&D as a percentage of sales ("research intensity") is higher in pharma than almost any other industry, and increased significantly in the 80s and has held constant since then.
Just saw this. Thanks for the link, it was an interesting read. It did feel like the authors leant heavily towards justifying currently spend rather than taking a critical view on it. It also didn't go very deep into R&D spend vs shareholder profit, instead trying to point out all possible places where profit was being over-accounted for and R&D costs were under-accounted.
I'd argue that US practice damages healthcare systems everywhere with the defensive practice of ordering every test and scanning every system to avoid liability. It contaminates thought processes where a 1 minutes pause would generate some level headed thought.
Pharmaceutical companies have an average profit margin of about 17%. That's about the highest by industry in the world. I think it's more accurate to say that America subsidises the profit margins of pharmaceutical companies.
Important to note is that that profit margin is after taking into account that pharmaceutical companies spend more on advertising than they do on research. How about we just take out the profit margin, take out the advertising and give the money directly to universities who already do a lot of the research and then make the results freely available? That way US citizens on HN will still be able to feel superior about subsidising the healthcare of the 'entire world' and everyone will have access to low cost generics.