Report: Why pharmaceutical prices drop once drugs are off-patent

The USA-based Pacific Research Institute has released a new report, titled The Economics of Pharmaceutical Pricing, by PRI senior fellow Wayne Winegarden. The study examines the market forces influencing the often dramatic price differences in pharmaceutical drugs before and after their patents expire.

“Some critics erroneously see the sharp declines in the prices of pharmaceuticals once their patents expire as a sign price-gouging existed while the pharmaceutical products were on patent,” said Dr Winegarden. “However, significant price declines for pharmaceuticals following patent expiration are an indication that the pharmaceutical market is efficiently balancing two goals: 1) encouraging innovation and 2) providing access for as many patients as possible,” he added.

Average cost of capital for R&D estimated at $17.2 billion