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Why Are New Drugs Expensive and How Can They Stay Affordable?

  • Basma Hammel
  • Martin C. MichelEmail author
Chapter
Part of the Handbook of Experimental Pharmacology book series

Abstract

Increasing life expectancy leading to a higher median age causes an increasing need for healthcare resources, which is aggravated by an increasing prevalence of preventable diseases such as type 2 diabetes. This includes increasing expenditures for medicines, although these increases when expressed as a share of overall societal wealth are more moderate than often claimed. An increasing use of generic medicines (currently about 90% of all prescriptions) means that costs for discovery and development of innovative drugs must be recovered on a shrinking percentage of prescriptions. However, the key challenge to affordable drugs is exponentially increasing costs to bring a new medicine to the market, which in turn are largely driven by an about 90% attrition rate after start of clinical development. While many factors will be required in concert to keep innovative medicines affordable, reducing attrition appears to be the factor with the greatest potential to contain escalating drug development costs and thereby medication expenditures.

Keywords

Attrition Drug affordability Drug pricing Generic drug prescriptions Healthcare expenditure Societal aging 

Abbreviations

GDP

Gross domestic product

HTA

Health technology assessment

R&D

Research and development

Notes

Conflict of Interest

BH is an employee of Boehringer Ingelheim; the opinions expressed here are solely those of the authors and not necessarily those of Boehringer Ingelheim. MCM is a past employee of Boehringer Ingelheim and presently an advisor to pharmaceutical companies (Algomedix, Apogepha, Astellas, Dr. Willmar Schwabe, Ferring, NMD, Sanofi, Velicept), venture capital (Inkef), and nonprofit organizations (Fraunhofer Society); he is also a shareholder of Velicept.

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Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.Institute of Pharmacology, West German Heart and Vascular Center, University of Duisburg-EssenEssenGermany
  2. 2.Department of PharmacologyJohannes Gutenberg UniversityMainzGermany

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