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Drug prices have nothing to do with research costs

According to American pharmaceutical companies, drugs are expensive because their research costs are high. The journalists said: I am checking.

You can complain about drug prices in Poland. But there are places in the world where it’s worse. The text on this topic was published on the wire portal.

Early joy of patients

The story began with the September event. It was then that ALS (amyotrophic lateral sclerosis) sufferers and their families learned that a new drug had been approved to slow the disease. The next day, the price was revealed: $158,000 a year. Meanwhile, the Institute for Clinical and Economic Review, an independent nonprofit that analyzes health care costs, estimated it at between $9,100 and $30,700.

The difference is shocking, although perhaps Americans are used to it. Prescription drugs there cost about 2.5 times more than in other countries. A quarter of Americans find it difficult to buy them. Almost every new cancer drug starts at more than $100,000 a year. Additionally, studies show that the average price of newly introduced drugs is 20 percent higher each year.

Pharmaceutical companies explain the high prices with high research costs. But is it true?

Scientist says check

Olivier Wouters, assistant professor of health policy at the London School of Economics and Political Science, decided to check it out. He and other scientists studied 60 drugs approved by the US Food and Drug Administration (FDA) between 2009 and 2018. Their prices are known, there was also information about research costs. And … scientists did not find a connection between research costs and high drug prices.

Waters acknowledges that the sample size in the study is small. But that’s because drug companies don’t release financial data. If the industry wants to challenge the conclusions drawn from the analysis, he says, it just needs to disclose more data.

The author consistently studies the pharmaceutical industry. In an article published a few years ago, he tried to determine how much it costs to introduce a new drug in the market. The general opinion was that it is about 2.8 billion dollars. This figure is based on one of the articles based on confidential data provided by pharmaceutical companies.

Meanwhile, Wouters and his team estimate the number to be around $1.3 billion. And that’s less than half of the generally accepted estimate. This means that significantly lower research and development costs should not have as much of an impact on drug prices as companies say.

How is it in other countries?

It must be said, however, that there is a real “free American” in this field in the USA. In other countries, the price of the drug is determined by specially appointed authorities. For example, in the UK, the National Institute for Health and Care Excellence (NICE) estimates the cost of a new drug by calculating how much it costs to give a patient an extra year of “quality of life” compared to the current treatment. If the drug has too little cost, NICE will not recommend it to the National Health Service.

Source: Unsplash @aleks_marinkovic

Countries like France and Germany negotiate price with drug companies based on the clinical benefits the drug provides over others on the market.

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