Drug and chemical companies continuously justify their high prices for their products on the basis that research costs for these products justify the high price asked. But there is a slippery concept in that the high cost for an accomplished product is tied to open ended research on possible products that may or may not prove viable. If the price for any specific product were closely put into accord to research for that particular product, the producer could more closely be held to account for the final price and there is a good chance that the product price could be more held to reasonable levels.
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But you are asking the drug companies to bear all of the risk for drugs that are not successful and do not work and give up any reward on those that do make it.
Presently there is no gauge on how much is actual expense and how much is overblown profit. Drug stocks are the most profitable things on the stock market and a very large portion of the expenses are overdone marketing. These unnecessary burdens are put on the back of sick people who deserve better treatment. There is evidently plenty of profit on successful drugs to take care of unsuccessful ventures. Why should drug companies be exempt from the risks that other businesses take for granted?
It is not realistic to think that drug and chemical companies know what the price for a given product will be as they are researching it. They usually don't know:1. how much it will turn out to cost to make it;2. whether there will be competitors for some or all of the uses;3. what restrictions will exist on its prescription;4. how much a higher price will limit use of the drug.
What I really don't get is why you seem to believe that people should risk time and money to develop something useful and then not get an unregulated reward. Isn't it simpler to just let people be greedy as long as they are doing good. As it is, patents expire, allowing others to copy without royalties.
I work in the information security office of a major US pharmaceutical company. It is one of the most regulated industries in the world. All of the audit regulations related to how drug research is done, clinical trial data, marketing claim etc adds cost do doing business which much be recovered if the business ( and it IS a business not a charity) is to remain viable. I work in the IM area and regulations require every single computer system to have an audit trail and be validated to standards set by the regulators. I can't even apply a software patch to a system without revalidating it. If pharmas were to market a drug solely based on the cost of discovering that drug they would quickly go out of business. The winning drugs have to be priced in such a way as to make up for the losing drugs. A drug patent last for only 17-20 years and it can take up to 10 years to bring a drug to market.
It is precisely government regulation and the government patent system that causes drugs to be so expensive for all of us.
Without them, drug companies would have no choice but to work together.
"a business, not a charity"
We can combine these two concepts and solve a lot of society's problems using a gift-economy approach to a new economic system (see the Hugs as a Currency idea, or more development of it here: Hugs & Stars.
Researchers are not in it to get rich, they want to make a difference in the world and help people.
We need 1) deregulation (see Ending the War on Drugs idea) and 2) an open source drug research movement where researchers share all results and are rewarded voluntarily by patients appreciative of their efforts.
This puts choice firmly back in the hands of the people that are taking the drugs. Tell me how proven or experimental a drug is, and then let me decide if I want to take it or not.
Assemble the shared experiences of everyone who does choose to try an experiemental drug and all these rediculously slow and expensive tests become unnecessary.
Let the market decide. If you don't like the price of a drug, don't buy it. In my mind, it doesn't matter what the justification is ("I want to be rich" is fine if you can provide something I want/need for a price I'm willing to pay.) I'm tired of the government sticking it's nose where it doesn't belong, trying to "protect" or "help" consumers. In most cases government intervention just makes the problem worse.
An addict is so highly motivated to get inebriated that they will design the most economically efficient ways even in the most primitive conditions. A sick person may be motivated to get well, but unless an epidemic breaks out that quarantines a pharmaceutical research and development laboratory, there is absolutely no such incentive to efficiently develop a cure for anything because they will make themselves obsolete in the process and after the epidemic is under control and all are well the sales will DECREASE. Very bad for business!
All the talk about permitting the free market to determine the price and use of vital drugs ignores the reality of the vital place medicine plays in the survival of humanity. Nobody would suggest that military capability should be controlled by the free market as the survival of the community is more vital than the profit of the suppliers. Humanity is engaged in a continuous war with the forces of nature which have the inevitable capability of eventually evolving a devastating method to destroy human life. To permit defense against this horror to lie totally in the hands of organizations devoted to profiting from human tragedy seems to me to, at minimum, be short sighted and at maximum, to accept that humanity should accept that its survival remain in the hands of people with no response to anything but their own greed.
In a free market economy you get whatever people are willing to pay. That's why the same drugs can be purchased in Mexico for less even though their shipping costs are higher. The people can't pay more, so companies let them pay less.