Expensive research and development are not necessarily the reason why drugs are so expensive.
Pharmaceuticals believe that high drug prices are needed to recover R&D costs, but researchers found that there is no relationship between the two.
A team of scientists from multiple countries studied whether high R&D (R&D) spending is the reason for high drug prices in the United States in the first known study.
"There is a hypothesis that high R&D costs justify high drug prices. If this is true, then we will see a positive connection between the two measures," said first author Dr Olivier Waters, assistant professor at the London School of Economics.
Inmaculada Hernandez, PharmD, PhD, PharmD, is an associate professor in the Scargos School of Pharmacy and Pharm Sciences at the University of California, San Diego and a senior author of a study that found that high drug prices were not related to R&D costs.
But in a recent paper published in the journal JAMA Network Open, Wouters from the Scargos School of Pharmacy and Pharmaceutical Sciences at the University of California, San Diego found that 60 new drugs approved by the U.S. Food and Drug Administration did not have this association from 2009 to 2018.
researchers compared information about drug pricing and R&D spending. They found no link between drug companies' R&D spending and the price of new drugs they charge. The researchers also evaluated the therapeutic value of the product, but they found no link between the therapeutic value and price.
"Our results provide evidence that pharmaceutical companies do not set prices based on what they spend on R&D or how good the drug is. Instead, they charge the fees the market will bear," said senior author Dr. Inmakurada Hernandez, associate professor at the Skaggs School of Pharmacy and Pharmaceutical Sciences, Ph.D.
Congressional Budget Office estimates that the pharmaceutical sector spent $83 billion on R&D in 2019. It is estimated that the company spends an average of $1 billion to $3 billion to bring a single new product to the market. According to data from database company Statista, the U.S. pharmaceutical industry sold more than US$490 billion in 2019, accounting for nearly half of the global pharmaceutical market.
American spends more on prescription drugs per capita than citizens of any other country. In 2019, that's equivalent to over $1,200 per person. Rand Company A 2021 study found that the price of drugs in the United States is 2.56 times higher than that in 32 comparable countries. A Caesar Family Foundation Health Tracking poll published earlier this year found that 8 out of 10 adults said the cost of prescription drugs was unreasonable.
In recent years, Congressional lawmakers have proposed many proposals aimed at putting downward pressure on drug prices. Pharmaceutical companies and trade groups opposed these reforms, believing that high drug prices are needed to resume R&D investment.
"If this argument is used to justify high prices and oppose measures to curb prescription drug costs, pharmaceutical companies should provide further data to support their claim that high drug prices are needed to recover R&D investments," Hernandez said.
