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Wednesday, October 7, 2015

Asthma/COPD Inhalers: Why They Cost So Much

Some of my asthmatic friends constantly criticize pharmaceuticals as run by a bunch of evil rich people who are greedy and make money at the expense of the sick.  Their evidence is the fact that newer, non-patented, asthma medicine costs so much.  I would like to argue that pharmaceutical companies (or most of them) are run by people who simply want to make enough profit to stay in business.

It is true that asthma medicine costs too much. Consider that if your doctor prescribes Advair to control your asthma, it will cost you about $250 a month if you pay out of pocket.  If you have a copay the cost will be about $70 per month.  This copay is high, considering a typical copay for generic medicine is between $20 and $40 a month.

 Consider the following facts as reported by, "Drugs: Why they cost so much?"
  • The high price of Advair is not the result of greed, but of regulation. In fact, pharmaceuticals are constantly looking to find new medicines to help people.  They continue to do this even though they know that only one out of every 10,000 discovered compounds actually becomes approved by the FDA
  • The early stages of development are not only expensive, but much of the expense incurred will not become approved drugs.
  • It takes about 7 to 10 years and an average cost of 500 million dollars to develop each new drug. Keep in mind this money is spent before the FDA approves the drug. This means that if the drug is not approved, the company loses the money. 
  • These expenses must be covered by the revenue from compounds that successfully become approved drugs (like Advair). 
  • Moreover, only 3 out of every 20 approved drugs bring in sufficient revenue to cover their developmental costs, and only 1 out of every 3 approved drugs generates enough money to cover the development costs of previous failures. This means that for a drug company to survive, it needs to discover a blockbuster (billion-dollar drug -- like Advair) every few years. 
  • After a drug is approved, millions of dollars are spent on marketing in educating healthcare providers and conducting post-marketing studies. Drug companies spend a lot of money on marketing because of the stiff competition they face from other drug companies for their drugs, and in order to develop each drug's highest revenue-generating potential. 
  • Given the poor odds of discovering another successful drug, it is more efficient to maximize the returns on a drug that is already on the market through advertising. In this sense, drug companies are no different than any other type of company. They exist to make a profit by helping people.
  • In addition to maximizing returns on their investment through advertising, drug companies also spend money to find new uses for drugs or better ways of using them. These efforts increase the use of the approved drugs and also benefit patients. 
  • Additionally, drug companies donate millions of dollars to charities and provide free drugs to individuals or countries that cannot afford medications. In fact, it was through a program that I was able to get free Breo for a year (otherwise, I cannot afford it and I have insurance). 
Surely any person working for any company wants to become rich, but in order for this to happen the company they work for must develop, market, advertise, and sell a successful product. Due to the high risk of failure and the low risk of actually gaining FDA approval, the medicines that are approved will have a hefty cost.

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