Could drugmakers have charged a billion dollars a pill before?
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New pharmaceuticals are essentially created for the US market. It is the only market in the world where the developers can make profit to recoup the costs of developing and bringing new drugs to to market (and pay for the drugs that failed the regulatory requirements).
After a new drug is created and approved for the US market the pharma company can go to Canada or the UK and negotiate a price for the drug that is the cost of manufacture plus a very small markup.
Medicare is health insurance for people over 65, which, unsurprizingly, use lots of medical services and consume lots of pharmaceuticals. If Medicare negotiated a price it would probably have a small markup and not compensate for the lost development costs for the failed pharmaceuticals.
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