Why do new medicines cost so much?


New medicines, protected by 20-year patents, can cost hundreds of dollars a packet and sometimes thousands. It is an increasing pressure on all health systems around the world. On the other hand, old drugs are out of patent, which means any company can make them, and usually the price drops very low because of the competition.

The billion dollar question is how much does it cost to manufacture a drug? The biggest issue is what you factor in. The big pharma companies say you have to calculate not only the (usually cheap) cost of the raw ingredients and manufacturing, but also the cost of research and development (R&D) of the drug—and also the R&D costs of all the drugs that fail to get to market. Clinical trials to test new drugs for safety and find out how well they work cost millions of dollars, and many drugs look good in the lab or in animals but don’t work in humans—or there are serious side effects.

Research pharma companies need to set those costs for failures against the profits from the drugs that work— it’s the only way they can afford to keep looking for new medicines, they say.

The Tufts Center for the Study of Drug Development in United States which produces estimates for the cost of making a medicine every few years, accepts that argument. Drug development is a long process, taking as long as 10 years, it says. It’s expensive. The centre’s latest figure for the cost of developing a prescription drug that gets marketing approval is a colossal $2.558 billion.

There are now a lot of campaigners calling for greater access to medicines in both rich and low-income countries. They are not impressed with the argument that pharma should cost in its failures. And furthermore, they say that often the best drugs were invented in university labs, paid for from public funds, so that should also be taken into account. In these cases, they say, the pharma companies buy up promising potential drugs and do the large-scale testing and development.

The first big access-to-medicines movement was sparked by HIV in Africa. The inequity of thousands dying for lack of drugs while people with HIV in San Francisco were alive and well on medication became a huge issue. Campaigners succeeded in enlisting the Indian generic company Cipla to make super-cheap versions of the HIV triple-drug combinations in 2001 that cost $100 a person a year instead of $10 000.

Patents normally apply for about 20 years but have to be registered in each country where the drug is sold. That stops other companies making rival copies that might compete to push the prices down. But India had different intellectual property rules at the time, which meant the HIV drugs patents did not apply there. So India’s generics companies became the pharmacy for the developing world. But the rules have since changed and attempts to make cheap copies of new drugs such as the hepatitis C medicines in India have been subject to long battles in court.

But as happened with HIV, each new crisis over access to medicines—whether concerning a common liver disease or a rare cancer, and particularly over the antibiotics that are under threat and vital to all our lives—is likely to put pressure on companies to find ways to bring the costs of medicines down.—Adapted from theguardian.com


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