Patents – the root cause of price inflation
The price is crucial for poor countries whose budgets for health are limited, and where the frequent absence of a health insurance system obliges patients to pay for the drugs out of their own pocket. This situation is also an important factor in rich countries, as it can result in decisions on rationing and endanger the continuation of universal health cover.
Pharmaceuticals companies justify the high price of their patented products by the necessity to amortise their research and development (R&D) costs. However, their pricing strategy is opaque, and published estimations of the average cost of developing a drug are shrouded in controversy. Even where the prices can vary significantly from one country to another, they use as a reference the fixed price (not monitored) for the United States market.
Protected from competition during the period of validity of their patents, the pharmaceutical multinationals impose their “global prices” everywhere in the world. Their business model is based upon very lucrative key products, much prized by investors. And for good reason: the annual turnover of these “blockbusters” exceeds a billion dollars.