In a 2018 report, the World Health Organization (WHO) stated that the cost of developing new cancer treatments doesn’t justify their exorbitant price tags.
“The costs of [research and development] and production may bear little or no relationship to how pharmaceutical companies set prices of cancer medicines,” WHO officials wrote in the report. Although drug makers point to failed clinical trials and other opportunity costs as reasons for the high prices, the report argues that the companies primarily set prices based on “extracting the maximum amount that a buyer is willing to pay for a medicine.” The authors also pointed out that government price-setting doesn’t always work.
Drug companies saw a median return of $14.50 for every dollar they spent on research and development, the authors stated, citing earlier research published in JAMA.
“The report is wrong on the facts and deeply flawed,” a representative from the Pharmaceutical Research and Manufacturers of America said in statement. “The report’s narrow scope fails to properly account for the value that cancer medicines provide to patients, health-care systems, and societies.”
Source: Axios, January 25, 2019.