Pharmaceutical companies do not gouge their patients

The pharmaceutical industry gets a bad rap for charging so much for its drugs. A recent Op-ed criticized the $300,000 cost for a cytic fibrosis drug. But reading further in the article we see that this drug, while a miracle at combatting this disease, only works for a population of 2,000 people. I can do the math and see that Vertex can, at most, gross $600,000,000 for this drug if everyone in this group buys it at full price. Given that a typical drug costs between $1-$2 billion to bring to market, this is still a loss leader. The drug is currently in Phase III clinical trials which mean the company has already spent about half the money.

The FDA and other worldwide regulatory agencies have forced thousands of regulations on pharmaceutical companies to ensure that drugs that reach patients are safe and effective. The work involved in meeting these regulations require thousands of people working full-time to bring new drugs to the market. That costs money. Who else is going to pay for it if not the final customers of the product.

Not every drug is suited for millions of patients so the cost of these specialty drugs must be borne by the small population of patients who need it.


As for pharmaceutical companies raking in incredible profits, do what I do and buy their stock. I haven't noticed any great increases in my stock values.