quentinc wrote:Actually, the drug companies wouldn't claim the cost of regulation is the reason (it's a very small amount compared to what they charge). They would claim it's needed to recoup their research & development costs ...
The drug companies try hundreds, if not thousands of compounds, before they find one that shows promise. They file for a patent, which is good for 17 years. Then they start testing it. Once they have figured out efficacy, dosages, etc, they petition the FDA to begin clinical trials. The trials can take many years and cost millions of dollars. If the trials are successful, then they petition the FDA for approval, and there is no guarantee the FDA will approve. They may reject entirely, or demand additional trials. Meanwhile the patent time limit is still in effect. The companies have already spent tens to hundreds of millions of dollars, there is maybe 5-6 years left on the patent, and they have not yet sold a single dose. Once the patent expires, any company can make a generic version of the drug without having to pay a penny to the original company for all the R&D. So the original company must recover all the costs within the few years left on the patent. How about starting the patent clock as soon as the FDA approves it? that would give the company more time to recover R&D so the drug could be offered at a lower cost.
Johnson and Johnson has an anesthetic ( I cannot remember the name) approved for in-utero surgery on a fetus. Regular anesthetics cannot be used because of the danger to the baby. There is still a risk to the baby, and if the baby is born with any defect or health problem at all, you can be sure J&J will be sued whether the anesthetic had anything to do with the problem at all. This anesthetic is incredibly expensive, and 99.5% of the cost is litigation reserve in anticipation they will be sued sometime over this anesthetic. Canada has different laws regarding suing drug manufacturers, so the same anesthetic is a fraction of the cost in Canada.