Pharmaceutical companies argue that the price of new treatments reflects the enormous costs of research and development. It’s also true that in a capitalist society, companies can charge what they believe the market will bear. The industry answers its critics by noting that the focus on price ignores the value of the medicines in treatment. It also notes that most cancers are treated in a sequential scale, where drugs are tried and new ones applied when old ones fail to arrest cancer’s development.
Each cancer-fighting drug is estimated to take approximately $1.2 billion to $1.3 billion to develop, typically with eight years of regulatory approval hurdles necessary to bring a drug to market. Pharmaceutical companies spent $50 billion in 2008 on development, according to the Wall Street Journal.
Patent limitations allow a drug’s patent protections to expire after 20 years, which means by the time the drugs are approved and come to market, they have less than 10 years to benefit their manufacturer’s bottom line.
That doesn’t count the number of medications that don’t navigate the complex road to market successfully, estimated at nearly 20 percent of those developed. Pharmacy companies claim that development costs determine retail prices of drugs, the number of potential patients who will use it, the projected patient life span and its return on investment.
The drug pricing problem is more acute in America than in other countries. Here, the market is fragmented, with those paying for medical costs ranging from individuals to private companies to insurance companies to federal and state governments. Unlike other nations, which use a single-payer system that can bargain hard using the economies of scale, the United States winds up with an ineffective competition between those who cover much of the health care system costs. Even though costs have caused some units to bargain harder for price breaks, costs continue to rise. That’s led to calls for legislation to more closely monitor research, development and manufacturing costs Big Pharma claims.