Opinion | Drug prices are lower when government and industry work together

The National Institutes of Health did not drop its “reasonable pricing clause” because of “pressure from the drug industry.”

The NIH was forced through political pressure to insert a provision requiring industry partners to sell products arising from its cooperative research and development agreements or licenses at a “reasonable price,” an undefined term. But rather than this leading to a golden age of cheap drugs, companies walked away. Realizing the consequences, then-NIH Director Harold Varmus rescinded the provision in 1995, saying it had “driven industry away from potentially beneficial scientific collaborations … without providing an offsetting benefit to the public.”