It’s Not What You Think
By UNIVERSITY OF CALIFORNIA - SAN DIEGO
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A multinational team of scientists
examined whether high R&D (research and development) expenditures account
for high drug prices in the United States in the first known study of its kind.
“There is a presumption that high R&D
costs justify high drug prices. If that were true, then we’d see a positive
association between the two measures,” said first author Olivier Wouters,
Ph.D., assistant professor at the London School of Economics and Political
Sciences.
Inmaculada Hernandez, PharmD, PhD, is an associate professor at Skaggs School of Pharmacy and Pharmaceutical Sciences at UC San Diego and senior author of a study that found high drug prices are not associated with the costs of research and development. Credit: UC San Diego Health Sciences
But in a paper recently published in the
journal JAMA Network Open, Wouters and colleagues from
the University of California San Diego’s Skaggs
School of Pharmacy and Pharmaceutical Sciences discovered no such association
for 60 new drugs approved by the US Food and Drug Administration from
2009 to 2018.
The researchers compared information on
drug pricing and R&D expenditures. They discovered no connection between
pharmaceutical corporations’ R&D spending and the prices they charge
for new drugs. The therapeutic value of a product was also evaluated by the
researchers, but they discovered no link between therapeutic value and
price.
“Our findings provide evidence that drug
companies do not set prices based on how much they spent on R&D or how good
a drug is. Instead, they charge what the market will bear,” said senior author
Inmaculada Hernandez, PharmD, Ph.D., associate professor at Skaggs School of
Pharmacy and Pharmaceutical Sciences.
The Congressional Budget Office estimates
that the pharmaceutical sector spent $83 billion on research and development in
2019. It is estimated that companies spend between $1 billion and $3 billion on
average to bring a single new product to market. According to the database
company Statista, the U.S. pharmaceutical industry earned more than $490
billion in sales in 2019, making up close to half of the worldwide
pharmaceutical market.
Americans spend more on prescription drugs
per capita than citizens in any other country. In 2019, that worked out to more
than $1,200 per person. A 2021 Rand Corporation study found U.S. drug prices
were 2.56 times higher than those in 32 comparable countries. A Kaiser Family
Foundation Health Tracking Poll published earlier this year found that eight in
10 adults said the cost of prescribed medications was unreasonable.
Legislators in Congress have in recent
years introduced numerous proposals intended to apply downward pressure on drug
prices. Pharmaceutical companies and trade groups have opposed these reforms,
arguing that high drug prices are needed to recover R&D investments.
“If this argument is to be used to justify
high prices and oppose measures to curb prescription drug costs, drug companies
should supply further data to support their claims that high drug prices are
needed to recover R&D investments,” said Hernandez.
Reference: “Association of Research and
Development Investments With Treatment Costs for New Drugs Approved From 2009
to 2018” by Olivier J. Wouters, Ph.D., Lucas A. Berenbrok, PharmD, MS, Meiqi
He, MS, Yihan Li, BS and Inmaculada Hernandez, PharmD, Ph.D., 26 September
2022, JAMA Network Open.
DOI: 10.1001/jamanetworkopen.2022.18623
The study authors acknowledged that the
analysis was limited by the small sample size.