Yes, that's the point


The Daily Mail has got itself all hot and bothered about the price of pharmaceutical drugs. They cost perhaps £100 to manufacture and are then sold to us for possibly £100,000 a treatment. Worse, poorer foreign countries get charged less than we do. As they say:

Indeed, global drug market analysts suggest England's high drug prices are subsidising the supply of cancer drugs elsewhere, with one saying they may be anything up to 90 per cent cheaper in developing countries. 'Even within Europe prices can vary by 50 per cent or more,' says Christian Glennie, head of healthcare research at Edison Investments in London. 'It is impossible to find out what healthcare purchasers are actually paying, but ultimately it is down to what the local market will bear.'

At which point we do rather have to spoil the most enjoyable outrage by pointing out that this is exactly the point.

These drugs all cost some $1 billion to find, create and test. They're administered to a limited number of patients in any one year and they need to make their money back within a decade (the patent lasts for 20 years, but approval usually takes a decade of that time). Thus they're going to be fearsomely expensive for that decade. At which point they transition to generics and they become hugely cheaper.

Further, yes, the rich world gets charged very much more for these drugs: because it's the rich world, see? The existence of these new treatments can be seen as a public good and why shouldn't the rich pay more for something like that than the poor? It's no different than rich people paying higher taxes to fund other public services like the NHS itself than the poor do.

All of the things that the Mail is complaining about are not faults in the system, blips that we need to do something about. They are the very point and purpose of said system, they're why we do what we do.

Finally, we do not set this up so that pharmaceutical companies make profits on the money they have already invested. We are not talking about anything righteous or just here. It is a purely utilitarian calculation: we want people to invest in the next round of curing the diseases that ail us. To do so we've got to allow the people who spent in the last round of such investment make money. Incentives do, after all, matter.