Big Pharma Says Drug Prices Reflect R&D Cost. Researchers Call BS.

[sl8]

https://www.wired.com/story/drug-research-pricing/

Big Pharma Says Drug Prices Reflect R&D Cost. Researchers Call BS

A new study finds no correlation between research and development spending and outlandish drug prices.

SCIENCE OCT 13, 2022 7:00 AM

At the end of September, a spot of good news: Relyvrio, a new drug for treating amyotrophic lateral sclerosis—or ALS, a neurological disorder without a cure—was approved in the United States. The ALS community rejoiced; the drug’s authorization was described as a “long-sought victory for patients.”

But the next day, the price of the medicine was revealed: $158,000 a year. This was far higher than what the Institute for Clinical and Economic Review, an independent nonprofit that analyzes health care costs, had estimated would be a reasonable price, which it deemed to be between $9,100 and $30,700.

Americans, though, probably weren’t shocked. Prescription drugs in the US cost about 2.5 times what they do in other countries, and a quarter of Americans find it difficult to afford them. Almost every new cancer drug starts at over $100,000 a year. And a 2022 study found that every year, the average price of newly released drugs is 20 percent higher.

How drug prices are set in the US is a mysterious black box. When rationalizing their lofty price tags, one of the most common reasons pharmaceutical companies will cite is that a high price is needed to make good on the money invested in research and development.

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[bucolic_frolic]

1. I think we're footing the R&D costs

The costs are in the high-ticket items it takes to recruit and retain quality researchers, the palatial buildings in which they work (and wouldn't work there if they didn't have them), and the extensive marketing apparatus to the medical community including product development, awareness, pharma sales personnel, advertising. You think 'junket' only applies to Congress?

It costs money to maintain a culture of prestige, you gotta give them that. The days of Jonas Salk went thataway. It's all competition and incentive, money juices the system, consumers pay for it in high drug prices or insurance costs.

[Genki Hikari]

2. We are footing the costs

With our tax dollars.

Medical research is funded by various entities, including the federal government, patient and disease groups, and industry. A primary source of federal funding for tomorrow’s cures comes from the National Institutes of Health (NIH). AAMC-member institutions conduct over 50 percent of the extramural research the NIH funds, which in turn creates hope for millions of Americans affected by serious diseases.

https://students-residents.aamc.org/advocacy/medical-research-sustainable-funding-tomorrows-cures

[Warpy]

3. Most breakthrough drugs are discovered at universities using NIH grants

What a drug company that pays a nominal fee to license that drug does is all the testing and data collection required to get it onto the market, something the university labs have no hope of doing.

Most drugs fail because either they're only as effective as sugar pills or some hidden danger pops up and the study is ended quickly.

This is where the cost comes in and why they're granted a 17 year patent on that drug. Once the patent expires, the theory goes that companies that manufacture generics will lower the costs.

Also, competitors do some R&D, coming up with "me-too" drugs that are slightly different chemically and can qualify for their own patents. Much of the time, these drugs are better than the originals. Sometimes (Vioxx, I'm looking at you) they kill people when they start to be widely used and the company gets sued. That also piles on the costs.

Finally, there's the pharmacy markup, which is enormous. It also makes sense as every pharmacy has to stock hundreds of medications and all those medications have expiration dates.

So it's not the stuff that goes into a drug or the test tube development that costs, it's the effort it takes to make sure it's effective and safe and get it to you. That's what you're paying for, especially when a drug is on patent.