Protect Incentives for Pharmaceutical Innovation

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In recent years, Congress has faced mounting public pressure to “do something” about the rapidly rising prices of prescription drugs and to rein in what are believed to be excessive industry profits. Although prescription drug spending comprises just 10 percent of overall health care costs, it has been one of the fastest growing components of overall health care spending during the past two decades—rising by an average of 11 percent annually during the 1990s and by 9 percent in 2006, compared to just 6 percent for spending on physician services, according to the Kaiser Family Foundation.