Pharma gyan Pandit

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.