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The Goodman Institute Health Blog

Expensive Drugs Are Worth the Price

Posted on September 15, 2022September 15, 2022 by John C. Goodman

The US determines drug viability for the whole world:

Except in rare cases, pharmaceutical companies develop drugs for the U.S. market….  Probable success in America is a necessary and sufficient condition for the development of new drugs.

New drugs are very expensive:

In 2022, the inflation-adjusted fixed cost per approved drug is close to $7 billion…. While it’s true that foreign governments mostly free-ride on the enormous investments in R&D made by the U.S., it’s also true that somebody has to pay. If nobody pays, many treatments that would improve and extend people’s lives won’t exist.

The cost is worth it:

Research by Columbia University economist Frank Lichtenberg suggests that 73% of the increase in life expectancy that high-income countries experienced between 2006 and 2016 was due solely to the adoption of modern drugs. He also found that the pharmaceutical expenditure per life-year saved was $13,904 across 26 high-income countries and $35,817 in the U.S. Most Americans would pay $36,000 to live an extra year.

Charles Hooper and David Henderson in the WSJ

1 thought on “Expensive Drugs Are Worth the Price”

  1. Bob Hertz says:
    September 15, 2022 at 2:50 pm

    No one asked me, but I am more restrained about praising new drugs than you are, Dr. Goodman.

    1. That cost per drug of $7 billion seems like industry propaganda to me. At an average salary of $70,000, that would imply 100,000 persons working on every new drug and every drug that fails.
    I cannot buy that.

    2. The extra years of life are not much fun if you are constantly broke from your drug costs. This does not always happen, due to insurance, but its possibility is troubling.

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