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High prices of new drugs: we are ready to do whatever it takes

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  • Stefano Capri

Abstract

Debates over pricing and reimbursement of new and innovative drugshave become increasingly dominated by the excessive high prices and the challenges to the sustainability of the public expenditures. This paper examines the phenomenon of raising prices through the examples of oncology and hepatitis C drugs. In many casesthe cost is not related to the benefit promised by the treatment. The costs of R&D of a drug seem to be shrouded in a cloud of mystery, while pharmaceutical companies are still struggling to provide their real R&D costs. The hostage theory is described here in order to explain the lack of instruments which are currently applied to evaluate a new drug. Finally some tentative algoritms are revised, and the need for a combination of cost-effectiveness and budget impact is proposed, trying to combine the private interest with the public interest.

Suggested Citation

  • Stefano Capri, 2020. "High prices of new drugs: we are ready to do whatever it takes," LIUC Papers in Economics 2020-8, Cattaneo University (LIUC).
    • Handle: RePEc:liu:liucec:2020-8
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    References listed on IDEAS

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