Posted by Michael Wonder on 09 Dec 2019
Base drug prices on value rather than R&D
8 December 2019 - For decades, R&D spending on pharmaceuticals has gone up more or less in tandem with the list prices of prescription drugs.
Pharmaceutical companies sometimes cite rising R&D expenditures to justify list prices of prescription drugs in the U.S.
It’s a truism that in order for pharmaceutical firms to be going concerns they must recoup costs, including R&D expenditures. It’s also a truism that if investors aren't enticed by large returns for taking big risks with their money, the investment dollars to fund pharmaceutical R&D will diminish.
Additionally, variable production costs may play a role in determining drug prices. For large molecule biologics, for example, marginal production costs are relatively high, while for small molecule pharmaceuticals such costs are low.
