Drug Pricing–piercing the fog

Using a blog to cite a blog is not my usual practice but look at this .

“In all cases, the companies spent more on marketing and administration than they did on research. In all but two cases profit exceeded research and development expenses.” Note also that all companies but one reported profits in the 15-30% of revenue (presumably), an almost unprecedented level. The outlier reported profits of 13.5%, so don’t feel too bad for them.

Big PHARMA’s shibbolith, that pricing is necessary to sustain development, falls apart with the data about actual costs of development and their costs of administration and marketing.

Sadly, PHARMA is pricing itself out of the market. The costs/year of many new cancer drugs exceed the median and average incomes in our country. In most instances the new drug’s efficacy is marginal and the benefit to the patient, if any, is measured in a few months additional survival. In a few cases the drugs are revolutionary (Gleevac) and those who cannot afford them simply spend down their savings, go on medicaid and you and I pay for them, or die.

So why are new drugs so expensive? Is this a bubble (irrational pricing that is not sustainable?). You might want to review some of medicynic’s earlier posting on pricing, patents, and profits.

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