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Drugs are very expensive things to create

Summary:
As we've pointed out more than once around here drugs are very expensive things to create. As we've also pointed out patents might not be the perfect solution to the public goods problem here but they're a useful one. Finally, we've also routinely pointed out that the cost of creation is largely based upon the regulations about gaining approval to sell something created:The cost of developing a cutting-edge medicine has jumped 70pc in just seven years to £1.2bn, a Deloitte study has found.Yet a survey of the world’s top 12 drug firms by R&D spend found that despite spending more on each treatment, the companies were struggling to increase profits.Deloitte’s analysis – which included data from FTSE 100 giants GSK and AstraZeneca – found projected returns on R&D investment dropped to 3.2pc

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As we've pointed out more than once around here drugs are very expensive things to create. As we've also pointed out patents might not be the perfect solution to the public goods problem here but they're a useful one. Finally, we've also routinely pointed out that the cost of creation is largely based upon the regulations about gaining approval to sell something created:

The cost of developing a cutting-edge medicine has jumped 70pc in just seven years to £1.2bn, a Deloitte study has found.

Yet a survey of the world’s top 12 drug firms by R&D spend found that despite spending more on each treatment, the companies were struggling to increase profits.

Deloitte’s analysis – which included data from FTSE 100 giants GSK and AstraZeneca – found projected returns on R&D investment dropped to 3.2pc this year, down from 10.1pc in 2010.

Over the same period the average cost to bring a drug to market jumped to just under $2bn (£1.2bn), up from $1.2bn (£708m).

We would like to have more drugs available to us. For we'd like to be able to treat at least, if not sure, those things which we currently cannot. But if the cost of new drug creation continues to spiral upwards then we'll be getting fewer of those things which save our lives than we would like.

The answer, therefore, is to change that regulatory system. If we reduce the bureaucracy in between bright ideas in the lab and the sick rising from their beds then more of the latter will do so. As is so often true, the solution to our ailments is for government to be doing rather less than it currently does. 

Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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