A new white paper from the USC Schaeffer Center for Health Policy & Economics shows that for every 10% reduction in expected revenues from prescription drug prices in the United States, innovation — such as clinical trial starts or new drug approvals — is expected to ultimately fall by 2.5% to 15%.

The Schaeffer Center estimate is based on a critical review of past studies measuring the impact of reduced revenues on pharmaceutical innovation. This review included the model used by the nonpartisan Congressional Budget Office to forecast the innovation impacts of Medicare’s drug price negotiation program.

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