Rising Drug Prices Are Not Justified By Biopharmaceutical Companies’ Spending On Research And Development, According To New Analysis

Andrzej Tokarski - - illustrative purposes only

In a new analysis published in the British Medical Journal this week, experts argued that high pharmaceutical drug prices are not justified by biopharmaceutical companies’ spending on research and development (R&D).

Aris Angelis, an assistant professor in health economics, revealed how between 1999 and 2018, the 15 largest biopharmaceutical companies in the world spent more money on selling, administrative, and general activities than fund allocation to R&D. It is important to note that these “general activities” include marketing.

Angelis and colleagues also pointed out how the majority of new drugs developed during this near-two-decade period provided little to no benefits over pre-existing treatments.

So, the team argued that if drug companies refocused their spending, then innovative drugs would be more accessible at affordable prices. They also called on changemakers to put forward legislation that prioritizes public health-oriented R&D.

Worries over the rising prices of new drugs have only grown over the last 10 years. In the United States, the estimated net price of newly-launched drugs skyrocketed from 2008 to 2021– increasing from about $1,400 a year to over $150,000, respectively.

Newly-developed drugs are not the only pain point, either, since older and more common drugs have also witnessed unexplained price hikes in recent years.

It has been a long-standing biopharmaceutical industry argument that high drug prices are necessary for sustaining R&D.

Still, while the authors of the analysis acknowledged that bringing new medications to market comes with significant financial risks, they claim that drug company spending does not relate to products.

For instance, financial reports from 1999 to 2018– which are publicly available– revealed that the 15 largest biopharmaceutical companies showed total revenues of $7.7 trillion.

Andrzej Tokarski – – illustrative purposes only

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