There is a presumption that high research and development costs justify high drug prices. But in a recently published paper of JAMA network open, from the University of California San Diego’s Skaggs school of pharmacy.
Found that the pharmaceutical sector spend $83 billion on research and development in 2019.
On average they spend between $1 billion - $3 billion to bring a single new product to market.
According to the database company STATISTA, the US pharmaceutical industry earned more than $490 billion in sales in 2019, which is half of the worldwide pharmaceutical market.
Finding suggests that drug companies do not set prices based on how much they spend on research and development or how good the drug is. Instead, they charge what the market will bear.