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R and D costs do not justify high drug prices

Written by Diane Archer

Prescription drugs are increasingly unaffordable largely because Congress has effectively granted pharmaceutical companies the ability to set prices. As a consequence, taxpayers, government and patients are busting their budgets paying for life-saving drugs; and, insurance premiums have been driven up ever higher because of these high-priced drugs. A new paper by Vinay Prasad and Sham Mailankody, published in JAMA Internal Medicine, helps show that R and D (research and development) costs do not justify high drug prices.

In short, it appears that even if Congress set drug prices 40 percent lower, as Sanders has proposed in his recently released Medicare for all bill, Pharma would still have the financial incentive to develop breakthrough drugs.

Prasad and Mailankody look at what it cost ten drug companies to develop ten recently FDA-approved cancer drugs, including the cost of developing drugs that failed and never came to market. Their findings show that the median cost is $648 million to get a new drug approved, about 25 percent of what Pharma allies claim.

Prasad and Mailankody’s research reveals that the cost of drug innovation does not justify the high price of many newly approved drugs. Rather, pharmaceutical companies are making billions of dollars from these drugs.

Congress effectively has given pharmaceutical companies monopoly power for determining which prescription drugs go to market and what they cost. As a result, Americans end up with a lot of high-priced me-too drugs and little meaningful innovation when it comes to vaccines and antibiotics. Moreover, the evidence suggests that many recently approved drugs have dangerous side effects or have no better clinical value than drugs already on the market and often cost more.

Pharma has tremendous power to keep policymakers in its pocket, including the ability to fund the campaign of the opponent of any new candidate or incumbent who proposes that government negotiate drug prices. And, drug companies will continue to invest heavily in opposing all initiatives that put their virtual monopolies at risk.

Until the public rises up in fierce opposition and demands fair drug pricing, smart innovation and clear information on the clinical benefits
and toxicities of all drugs, Pharma’s power will continue, and the public will continue to be at risk.

If you want Congress to rein in drug prices, please sign this petition.

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