High cost of new drugs.

he investigation by The BMJ and Cambridge and Bath universities into the availability of breakthrough hepatitis C drugs raises important questions for NHS England about access to lifesaving drugs. But why are medicines so expensive in the first place? The pricing strategy of Gilead for sofosbuvir (Sovaldi) and ledipasvir-sofosbuvir (Harvoni) raises questions that go well beyond the UK. The BMJ's investigation is just an example of a more general problem. What is the right price to pay for a particular drug, and how should this be determined? Pharmaceutical innovation should be structured to focus on unmet health needs globally and delivers therapeutic advances that are affordable and accessible to all, 2 not just profitable for manufacturers. This requires an approach that directs effort towards therapeutic innovations over " me too " drugs, and a transparent financing and pricing structure, focused on access, and reflecting the collective investment and risk taking involved. Drug companies have often ignored the collective element of innovation and argued that their research and development investment justifies the extraordinarily high prices for some medicines, despite the lack of transparency. The Drugs for Neglected Diseases initiative has documented much lower drug development costs, 3 4 and several authors have shown the extent to which taxpayer funded investments subsidises those costs. 5 In the US alone, tax payers fund $32bn a year of research and development expenditure through the National Institutes of Health (NIH). 6 Value judgment Sofosbuvir and ledipasvir, the drugs on which The BMJ investigation is based, relied on early stage funding from the NIH and the Veterans Administration. Sales of the two drugs were around $12bn in 2014, 8 far in excess of the $880.3m which Gilead reported for sofosbuvir related trials from 2012 to 2014, 7 showing a complete disconnection between price and development costs. As high prices are hard to justify based on research and development costs, drug companies have instead argued that their prices are proportionate to the intrinsic value of the drugs—that is, the costs to society if a disease was not treated, or if treated with the second best therapy available. " Price is the wrong discussion, " declared Gilead's executive vice president, Gregg Alton, responding to criticism over the price of sofosbuvir, " value should be the subject. " 9 But there is no consistent link between a drug's price and the associated medical benefit. 10 A study published in …