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.
