This dynamic of profit paying for research is the engine behind innovation. When that dynamic is interfered with through excessive government regulation, innovation falters, as it has in Europe. Europe was once the world's greatest medical innovator. The cause is excessive government interference in the marketplace. In most European countries, the government is the largest purchaser of pharmaceuticals.
Governments use their power to negotiate down the price of drugs.
The end result is significantly less profit for manufacturers and, consequently, significantly less revenue available for research. The numbers tell the tale. Between 1975 and 1994, the United States developed 45 percent of new major drugs. By the year 2002, European pharmaceutical companies will supply only five of the world's top-selling drugs. U.S. dominance is not a function of better scientists, only better policies.