Skyrocketing drug prices: What's behind the veil?

Skyrocketing drug prices: What's behind the veil?

Andrew Witty, CEO of GlaxoSmithKline which itself is one of the top pharmaceutical companies, exclaimed that a billion dollar figure to develop a drug is a complete myth. This further strengthens the suspicion regarding the credibility of the incredible production prices.

While the government, over the years, has been trying to curtail the prices of branded drugs; most of their efforts to make them available to general public at cheaper rates seem to go in vain. The bottlenecks being their failure to stand against the political clout and enormous wealth of large pharmaceutical companies. A new study indicates that while the actual cost of producing the drug is somewhere around $ 55 million, but on introduction to the market Big Pharma escalated it immensely. The drug company concealed this mammoth profit by exaggerating research and developments costs in their statistics and records.

Delving further into the estimates used by Tuft’s study prior to launching the drug at the said price, shows that most of them are off the mark. Except for a little background, they haven’t even shared their actual drug building and $2.5 billion pricing model. When it comes to the estimates regarding directs spending on the controversial project, Tuft’s hasn’t disclosed the exact costs incurred in the production. They obtained the research and development costs of 106 drugs from a survey of ten other pharmaceutical companies and based their calculations on the extracted data. But if one has to believe the end results of their assumptions and calculations, then they have to be willing to pay a billion dollars for every tiny medicine bottle in their cupboard! Also a significant number of drugs approved by Food and Drug Administration are made by Big Pharma, so that obviously biases the result of estimations in their favour. Also according to a research carried out by Light and Warburton, Tuft’s didn’t reduce the tax breaks from their research and development calculations; which if otherwise included would have lowered the net amount by approximately 40%. Several other mistakes such as use of mean cost rather than the median cost and use of a much longer time taken to conduct clinical trials as compared to usual were also pointed out. Rounding up all assumptions and considering all the flaws, the final cost could be cut down to $59 million instead of the ridiculous price as suggested.

Today more than half of the pharmaceutical funding in research and development comes at the taxpayer’s expense or by philanthropy,  and in case of rising costs of production, the government is bound to increase this figure more and more. The taxpayers face double thrashing by paying in the form of increased taxes and then again while paying for the highly priced drugs. It’s time that the R&D system’s loopholes should be thoroughly inspected and steps should be taken to fix the system.

Doctor Vista Healthcare Resource

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