Drug Costs Are Not Justified by Research and Development Costs

It’s no secret that drug costs in the United States have continued to increase in the past few years. The Kaiser Family Foundation states that between 2019 and 2022, 48% of prescription drugs had risen in price. In a recent publication in JAMA Network Open, researchers conducted a cross-sectional study of 60 different drugs approved from 2009 to 2018 and found no correlation between drug prices and research and development costs.

Understanding how the costs of drugs are driven is essential for addressing multiple inequities in access to medicine. Researchers in the publication state, “To our knowledge, this study was the first to quantitatively explore whether research and development investments were associated with drug prices in the United States.”

Investigators looked at acute, chronic, and cyclical drugs, such as chemotherapy. Across all 60 drugs analyzed, there was no correlation between research and development and drug prices. After conducting a similar analysis was 2021 drug costs, the findings persisted.

“The lack of association between research and development investments and list prices of drugs was not unexpected, given that pharmaceutical firms aim to maximize profits based on consumers’ willingness to pay. This study offers empirical evidence that, in the US, drug companies charge what the market will bear,” concluded researchers in the study.

Data from other publications suggest that pharmaceutical patents and market exclusivity may contribute to the rising drug prices in the US. This increase in drug costs impacts patients, payers, and providers. It presents an additional barrier to care, leading to worsened medication adherence and increased adverse outcomes.

“The lack of association between research and development investments and list prices of drugs is, however, of major policy relevance because drug companies and their trade associations often claim that high drug prices are needed to recover research and development investments,” asserted the investigators in the study.

Clinicians, providers, and other stakeholders are urged to advocate for reasonable drug prices that are more accessible to patients overall.