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IPFS News Link • Drugs and Medications

How Prescription Drugs Get So Wildly Expensive

• http://www.wired.com

Martin Shkreli is the Internet's villain of the week. After buying and then immediately jacking up the price of a drug that treats a potentially deadly parasite, he's become a sneering meme in social media, a think-piece punching bag, and a policy springboard for presidential candidates. He gives a bad name to former hedge fund pharmaceutical CEOs everywhere.

How can that be? Drug companies and greed are supposed to go together like bankers and um, greed. Shkreli recently capitulated to the public outrage and said he'd drop his drug's price. But he hasn't backed down from his rationale for the original price hike: This is what it takes to do research, to be profitable, to be successful in his highly regulated industry.

And in a way, he's right. Long before you ever have a chance to balk at drug prices, the companies that make the medicine rack up billion-dollar tabs from research, development, and clinical trials. Insurance companies negotiate for distribution, and whittle more money away from a company's bottom line. Not to mention that without profits, investors won't invest in pharma, and drugs won't get made. So is Shkreli really an excessive rogue actor, or is he merely playing by the same rules as the rest of the pharmaceutical industry?

Drugs start in laboratories. Some scientist—at a university, government lab, or pharmaceutical company—finds a chemical compound that seems to have some effect on some malady. She or he isolates the compound and tests its effects on individual cells in petri dishes, then animals, building a case for human use. This preclinical work, called drug discovery, can take three to four years, and only about one in 1,000 compounds survive to get tested on human beings.

Human tests—called clinical trials—are the gauntlet of drug development, and have three phases. The first tests the drug for safety, the second for dosing, and the third makes sure the drug is effective enough against whatever it targets that it's worth putting on the market. Lasting anywhere from five to ten years, only about one in ten drugs survives clinical trials to market.


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