U.S. pharmaceutical prices started to explode in the 1980s
I am struck by the explosion in drug spending in the 1980s, nearly doubling as a share of GDP over the decade. [It] had not increased at all as a share of GDP over the prior two decades. The obvious villain is the passage of the Bayh-Dole Act in 1980, which allowed private corporations to get patent rights to government-funded research. This led to more investment in research and development, but also to a huge increase in spending the difference between the current 2.2% of GDP spent on drugs and the 0.4% spent in 1980 – equal to $360 bill a year, roughly five times annual spending on food stamps.
Source: Real World Econ Rev, 14/11/018 https://rwer.wordpress.com/2018/11/14/us-drug-prices-started-to-explode-in-the-1980s-contrary-to-what-the-nyt-tells-you/
Dr Dean Baker is a U.S. macro- economist and co-founder, with Mark Weisbrot, of the Center for Economic and Policy Research in Washington, D.C.