Eli5: What is the purpose of patents in the pharmaceutical industry and what kind of impact do they have on drug pricing?
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Developing new drugs is expensive because you have to do a ton of clinical trials and studies before you are allowed to sell the drug on the market. Developing new drugs also takes entire teams of highly-trained, highly-educated scientists that usually demand a generous wage or they’ll move elsewhere.
So, suppose you spent all that money over years and years to find the recipe for a drug against a given disease. Then some other company shows up, nabs your recipe, and sells your drug for a fraction of the price it would take you to make back the cost of researching it in the first place. Bang, you can close your business.
THAT BEING SAID: It is equally true that many pharma companies abuse patents because a patent for rare diseases can give them a monopoly over the only drug that is suitable for treatment. Meaning they (theoretically) can put the price as high as they like. And especially in the US, many pharma giants do exactly that. Together with the finicky American healthcare system, there are more than enough people who have to die not because there wouldn’t be a chance to save them, but because they can’t afford the necessary drug.
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