Why do some innovative new therapies have such high list prices?

September 14, 2018 8:42 pm

Bringing new treatments to market is enormously expensive and time-consuming. The average cost to develop a new prescription drug exceeds $2.8 billion, and the process takes more than a decade. Just 10 percent of the new treatments that make it to Phase 1 of the Food and Drug Administration’s exhaustive testing process are ever approved. And just two out of every 10 new treatments approved ever generates enough revenue to recoup the money spent to develop it. Additionally, many drug makers offer rebates and other big discounts to significantly lower patients’ out-of-pocket costs for these new medicines. That explains why more than nine out of every 10 publicly traded biopharmaceutical companies don’t earn a profit.