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Johns Hopkins Health Alert

Why Is Prescription Medication So Costly?

Comments (5)

Developing a new drug for use in humans is an expensive gamble. According to the Pharmaceutical Research and Manufacturers of America (PhRMA), researchers may screen as many as 10,000 different molecules to identify only 250 worthy of preliminary study in test tubes, cell cultures and laboratory animals. Of those 250 candidate drugs, only five might be suitable for testing in people. Only one of those five drugs may end up on the pharmacy shelf. 

Along the way, pharmaceutical companies typically spend hundreds of millions of dollars and 10 to 15 years to create and market a new drug. The most expensive drugs to develop are those involving biotechnology techniques, such as genetically engineering bacteria to produce a medication.

An independent estimate by the Tufts Center for the Study of Drug Development pegged the average cost of developing a new biopharmaceutical at $1.2 billion, while clinical trial success rates have fallen to just 16 percent.

Sometimes, the industry loses the gamble. In December 2006, for example, the pharmaceutical company Pfizer pulled the plug on development of a promising medication for high cholesterol, torcetrapib, when research suggested it might raise the risk of heart attacks and death. In clinical trials, torcetrapib raised "good" high-density lipoprotein (HDL) cholesterol levels and was expected to become a blockbuster product. The company had already invested $800 million in this promising drug when it halted development.

Despite the costs, the industry continues to invest heavily in new products. In 2009, according to a PhRMA report, there were 312 drugs under development for heart disease and stroke, the leading causes of death in Americans.

Posted in Prescription Drugs on September 20, 2011


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Health Alerts registered users may post comments and share experiences here at their own discretion. We regret that questions on individual health concerns to the Johns Hopkins editors cannot be answered in this space.

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Why are the same prescription drugs significantly less expensive in other countries. Why is our federal government prohibited from bargaining for lower prescription drug prices, e.g. the same costs paid by other countries. And then there is Medicare Plan D, and the costs of lobbying and marketing--another sordid story. Pharmaceutical companies' incomes are robust to say the least. Your post on the costs of research don't begin to tell the real story and is misleading to say the least. Why did you post it on a web site that is supposed to be providing unbiased, clear and understandable information about current research findings regarding common medical conditions. Why should I trust information provided by John Hopkins in the future if this kind of misinformation is posted on your web site.

Posted by: ngendel | September 24, 2011 11:02 AM

Prescription drugs are cheaper in Canada and other countries with socialized medicine because the drugs are price controlled. Manufacturers of those drugs are forced by government edict to sell below fair market values, i.e. to subsidize the actual costs of the drugs, in effect to subsidize the health costs of the country. It would be unethical if not immoral for the US to buy drugs from Canada or other similar countries with socialized medicine because the US would be complicite in unethical price control. The costs of developing pharmaceuticals are what they are. The application of a command economy doesn't change the reality of those costs. It simply institutionalizes soft tyranny.

Dr. Angelo Mirabella

Posted by: amirabella | September 24, 2011 3:34 PM

Three more questions:

1) Per your answer above, then why do the pharma companies sell below "market value" in other countries? If they do not agree with the allowed prices, why do they negotiate those below-market prices rather than just walk away from that particular market? In effect, doesn't that mean that US individual and government consumers are subsidizing the cost of drug development for use by those socialized countries, something which we can no longer afford to do?

2) If the US cannot negotiate prices with pharma companies for Medicare and Medicaid, how can the US otherwise lower its costs in that area of health care?

3) Why are pharma companies not open about where drugs are produced, including the source countries for all ingredients? Why does the FDA not back transparency about the locations of drug production?

Posted by: jeff.boak | September 24, 2011 7:10 PM

Regarding jeff boak's first question, it's an oxymoron to say that pharmaceutical companys agree to or negotiate controlled prices, Controlled prices are "jackbooted", not contingent on agreement, involuntary. Those companies remain, obviously, because some income is preferable to no income. Questions 2 and 3 are replete with misinformation and factual distortions, but no matter since they are red herrings and not worth dealing with. They have little or nothing to do with the topic under discsussion and are examples of the well known argumentive "hit below the belt" described as "change the subject and attack" or alternatively "put a marshmellow baby in front of your debating opponent."

Posted by: amirabella | September 25, 2011 8:32 AM

Would advertising costs for drug companies have no effect on the cost of prescription drugs (since this often exceeds development costs)?

Posted by: arichard | September 27, 2011 11:44 AM

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