Prescription costs

Prescription costs are a common health care cost for many people and also the source of economic hardship for some.

Prescription costs is a vague term: It can either mean the entire cost of a prescribed drug or health aide (a nebulizer, a wheelchair, etc.) - or just the out-of-pocket prescription cost for those with health insurance, since some of it may be paid by a third party. Prescription costs are a regular health care cost for the sick and may mean economic hardship for the underprivileged. Prescription costs in the U.S. include deductibles, co-payments, and upper limits in coverage.

As of 2017, prescription costs range from just more than 15% in high income countries to 25% in lower-middle income countries and low income countries.

Pricing any pharmaceutical drug for sale to the general public is daunting. Per Forbes, setting a high ceiling price for a new drug could be problematic as physicians could shy away from prescribing the drug, because the cost could be too great for the benefit. Setting too low of a price could imply inferiority, that the drug is too "weak" for the market. There are many different pricing strategies and factors that go into the research and evaluation of a future drug’s price with whole departments within US pharmaceutical companies like Pfizer devoted to cost analysis. Regardless of the pricing strategy the common theme within all factors is to maximize profits.

This chart shows discrepancies in drug pricing in different countries, which indicates differences in both market conditions and government regulation. For instance, Canada has a drug ceiling price that drug prices cannot exceed.

Studies have placed the amount spent on drug marketing at 2-19 times that on drug research.

The table shows research and development statistics for pharmaceutical companies as of 2013 per Astra Zeneca.

Severin Schwan, the CEO of the Swiss company Roche, reported that Roche’s research and development costs amounted to $8.4 billion, a quarter of the entire National Institutes of Health budget. Given the profit-driven nature of pharmaceutical companies and their research and development expenses, companies use their research and development expenses as a starting point to determine appropriate yet profitable prices.

Pharmaceutical companies spend a large amount on research and development before a drug is released to the market and costs can be further divided into three major fields: the discovery into the drug’s specific medical field, clinical trials, and failed drugs.

Drug discovery is the area of research and development that amounts to the most amount of time and money. The process can involve scientists to determine the germs, viruses, and bacteria that cause a specific disease or illness. The time frame can range from 3–20 years and costs can range between several million to tens of millions of dollars. Research teams attempt to break down disease components to find abnormal events/processes taking place in the body. Only then do scientists work on developing chemical compounds to treat these abnormalities with the aid of computer models.

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Wikipedia