Here are the reasons why prescription
drugs are so expensive
Here are the main
reasons:
1.
No price controls
The US government
doesn't regulate prices, unlike many countries where government agencies
negotiate prices for every drug.
In the US, drugmakers
set wholesale prices based mostly on what competing brand-name drugs cost and
whether their new drug is better.
2.
Lengthy patents
Patents last longer
than in other countries, usually giving a drug's maker exclusivity that
prevents competition for 20 years from when the patent is issued. Because
patents are filed while drugs are still in testing, that clock starts ticking
long before the drug goes on sale.
Their makers generally
increase their prices every year, by about 5% or more. Those increases add up
and become bigger as the expiration of the patent approaches.
3.
Limited competition
For many drugs, there
isn't enough competition to hold down prices. Many older generic drugs were
priced too low to be profitable, so some drugmakers stopped making them. Once
only one company or two companies make a drug, the price usually shoots up.
4.
Small markets
Many new drugs are for
rare conditions or cancer subtypes involving a particular genetic mutation, so
they might help just thousands or hundreds of patients. To recoup research and
development costs, drugmakers set high prices, though they offer many patients
financial assistance.
5.
Development and production costs
Research is becoming
increasingly expensive. Industry groups say it can take about a decade and well
over $1 billion to get a new drug approved, though that includes development
costs for the many drugs that don't work out.
6.
Fewer new generics
After a huge wave of
patent expirations from 2011 through 2013 that brought generic versions of
drugs taken daily by millions of patients, the number of popular drugs going
off patent has declined. That has contributed to total US spending on medicine
rising.