The High Cost of Pharmaceuticals

As a society, there is nothing more important to us than our health.  Advancements in technology have given us the ability to produce highly effective drugs. This has never been truer in the pharmaceutical industry, where new discoveries literally translate into increased life spans and lives saved. For example, Aids drugs in South Africa have increased life spans in the region by five years.

The Two Sides

The pharmaceutical industry has the immense challenge of maintaining public interests at heart while balancing stakeholders’ interests within the company. With lengthy approval periods for new drugs and the high costs associated with research and development, the industry is burdened with a great deal of risk. For this reason drug companies need to charge enough to make a healthy profit. Without a healthy profit, investment would go elsewhere.

MedicineNet.com has an article outlining the reasons drugs cost so much in the article "Why Drugs Cost So Much". Omudhome Ogbru writes "only 3 out of 20 approved drugs bring in sufficient revenue to cover their developmental costs". Therefore companies need to bring in enough profit to cover these initial costs. 

One way they does this is through exclusive rights patents. These patents allow the company to sell the drug without any competition from other companies until the patent expires. This is the reason they can charge extremely high prices and get away with it.

An article published in the The Wall Street Journal named "Should Patents on Pharmaceuticals Be Extended" Els Torreele fights against the idea of longer patents. She says the problem with these patents is that companies are finding it more profitable to repackage drugs than to create new ones. If a company can repackage a drug and renew their patent they will be able to receive years of overinflated profits.

Personally I believe that drug innovation is important but it seems like drug companies are becoming more about the business than about the science. This is making it more and more difficult for people to purchase the drugs they need. The situation is much worse in the US where some actually drive to Canada to get the drugs they need. In Canada, our government puts a price ceiling on how much drug companies can charge for a particular drug, making them cheaper.