Everyone is concerned about the rising price of pharmaceuticals
but no one seems to know what to do about the problem. To be
sure, solutions are being offered all the time. Among the most
popular proposals are imposing price controls on
pharmaceuticals, using the bargaining power of the federal and
state governments to extract "voluntary" price concessions from
pharmaceutical companies, or making it easier for generic drugs
to reach the marketplace sooner as the McCain-Schumer bill
currently being debated in Congress proposes. None of these so-
called solutions, however, comes to grips with the fundamental
tradeoff between lower drug prices and more new drugs.
Developing a new drug is an increasingly expensive and risky
process. The average cost of bringing a drug to market is now
approximately $800 million, and for every 5,000 compounds that
are tested in the laboratory it's estimated that only one will
end up as a marketed drug. Pharmaceutical firms spend hundreds
of millions of dollars on research only beca