Analysis
Are Prescription Drug Prices Too High? Or Are They An Investment In Living Longer?
We seem to constantly see and hear headlines about high prescription drug prices. And, of course, there is something to be said for getting the benefit of medical innovation at the lowest possible price. But we may justifiably ask: what drug prices would be fair? Just consider the value of the benefit of pharmaceuticals in terms of extending life expectancy. Out of all the innovations of modern medicine (e.g. procedures, devices, diagnostics, sanitation), it is pharmaceuticals that seem to account for about half of the gains in life expectancy (1). Considering that life expectancy was close to 30 at the beginning of the 20th century (2) and is almost 80 now (3), half of that nearly 50 year gain in life expectancy for every person can be attributed to pharmaceuticals. And what does this cost? The world spends just over $1 trillion per year on pharmaceuticals, with a disproportionate amount of that spending concentrated in the United States (4). One would have to set a pretty low value on human life to make the argument that the world is overpaying. The math works out to just shy of $3,500 paid per year for each person worldwide. I think we would all probably agree on a common choice between paying that much or dying 25 years earlier.
