[Pharmaceutical pricing; what is reasonable?]

Abstract

The ultimate aim of investigations into the costs of research and development (R&D) is to inform societal discussions on drug affordability. The premise is that knowing R&D costs will help when setting 'reasonable' drug prices. While high R&D costs may explain why prices are high, these costs need not justify paying those prices when health gains are limited. Value-based pricing models that explicitly take health gains into account also have limitations, most notably that they ignore R&D costs and consider prices to be 'reasonable' simply because other high costs of care can be avoided. Both cost-based and value-based pricing models are necessary to determine whether prices are reasonable; however, redesigning the drug innovation ecosystem could bring a more relevant contribution to reasonable drug prices than evaluation of the reasonableness of the price.