A story in the Wall Street Journal (August 1, 2011) describes the challenges in launching new drugs, given the “cost effectiveness” concern by health authorities. This means that new drugs have to be effective in treatment, but also deliver sufficient enough value over existing treatment plans, given increasing frugality by insureres and governments.  Such demands impact pricing and the hurdles for new drugs. In addition, such approvals for ‘cost effectiveness” are done separately by each country.  Furthermore, physician worries about the liability of  potentially unknown side effects of drugs has further slowed adoption. How will such worries impact the drug company incentives for new product launches ? Will such trends decrease prices for new drugs or decrease R&D spending on new drug development ?