How much does the production of a medicine account for the high cost?
July 24, 2011 8:21 AM Subscribe
When it comes to very expensive medicines, how much of the cost is due to just the production of the drugs and how much is because of other factors?
posted by gkhan to Science & Nature (15 answers total) 1 user marked this as a favorite
I was having a discussion about healthcare the other night with some friends, and the topic of very expensive medication came up, and I used the argument that the reason some drugs are so ridiculously expensive is not that they cost really all that much to produce, but because of other factors. The R&D needed to develop the medicine (including all the testing), the fact that new drugs are patented, that almost no one pays the cost out-of-pocket which hides the cost from the consumer and the company can basically charge anything they want, and, obviously, that people will pay absolutely anything humanly possible for life-saving or life-altering medications.
I realized afterwards, though, that I didn't actually know if this is true. I've always sort-of assumed it, but I hadn't actually checked it out. It's a big  in my brain. So is it true? And if it is, of the total cost of a drug, what percentage is due to production? Surely there are studies on this?
Just as an example: I have a family member who was recently (about a year and a half ago) diagnosed with MS, and she now has to take extremely expensive medicine for the rest of her life. I've been told that if she were to pay out of pocket, the cost would be something like 15-20,000 dollars every year (I don't know what specific medicines or the exact figure, but it's somewhere around there). I don't know, maybe synthesizing extremely advanced modern drugs to treat neurological disorders is stupid hard to do and the production cost really is significant? Or is it just because there's only one company making these drugs and there aren't any generics available?
I should also add finally that I'm not American, so this has nothing to do with the American health-care debate. I'm just curious about this as a general matter.