October 1st, 2013
Posted by Ken Walz
A recent article in Forbes by Matthew Herper points to one of the most significant opportunities for innovation in medicine – drug development costs. Herper estimated that a single drug can cost $5 billion to discover and develop – five times the conventional wisdom, which has long settled on $1 billion as the average cost to create a new drug.
The fact that drug development is expensive is, of course, well known, and is why there is no easy solution to the problem of high – sometimes astronomical – prescription drug prices. When looking at total healthcare costs, it is worth noting that there are many drivers in addition to drug costs. Vlogger John Green, in a widely circulated video last week, argues that every input in healthcare is too expensive. And, according to Susan Desmond-Hellmann, chancellor of UCSF, these cost increases are “not sustainable.” But certainly, prescription drug costs are a significant part of the problem. Separate from these arguments, pharmaceutical companies are often criticized for new treatments that are extraordinarily expensive (the CF drug Kalydeco at a cost of $294,000 per year is a recent example) and for the fact that many charge higher prices in the U.S. than they do in other countries.
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