Especially in the U.S. where drugs cost twice as much as in the rest of the world. It is a tough business. On average, only one in every 5,000 compounds that drug companies discover and put through preclinical testing becomes an approved drug. Of the drugs started in clinical trials on humans, only 10 percent secure F.D.A. approval.
Still, it is profitable. Gilead, maker of Sovaldi, has profits of around 50 percent. Biogen, Amgen and other biotech firms have profits of around 30 percent. Merck and Pfizer are seeing profits of 18 percent.
Some drugs can cost you $300,000 per year. Although these specialty drugs are not widely used (they represent about 1 percent of prescriptions), they do bring on the money ( they account for 32 percent of all spending on drugs).
Ezekiel Emmanuel asks why don't we adopt a system like Australia or Switzerland? Australia is the only purchaser of drugs for the country, making drugs available at fixed prices that are now listed online. Switzerland includes only those drugs that are effective and cost-effective on its approved drug list. It then establishes a maximum allowable price for the drug, but up to that point, companies can decide what to charge.
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