High drug prices are not justified by industry’s spending on research and development

Concerns over the prices of new medicines have been growing over the past decade. In the US, estimated net prices of newly launched prescription drugs increased from a median of around $1400 a year (£1200; €1300) in 2008 to over $150 000 a year in 2021.1 Onasemnogene abeparvovec (Zolgensma), a gene therapy approved by the US Food and Drug Administration in 2019 for spinal muscular atrophy, was at the time of approval the most expensive drug ever, with a price of over $2m for a single dose treatment.2 Several more recent drugs for rare diseases are priced even higher,3 with a gene therapy for haemophilia B approved by the FDA in November 2022 costing $3.5m per dose.4 But even old and common drugs have seen inexplicable price increases: in the US, the list price of some insulin products increased more than twofold from 2007 to 2018,5 while a US government report identified 1216 products that had seen prices rise above inflation between July 2021 and July 2022, with an average increase of 31.6%.6

The biopharmaceutical industry has long argued that high prices are needed to sustain research and development (R&D) for new medicines. When asked to justify a price tag of $10 000 a month for a drug to treat prostate cancer, a senior executive at Johnson & Johnson responded: “The easy diseases have largely been solved. It gets harder and harder as we go after new treatments for ever more challenging diseases.”7 Drug companies often note how their shareholders and investors could easily shift their investments to other more profitable and less risky sectors. Indeed, there are large financial risks associated with bringing new …