The three fundamental questions in drug pricing.

The first principle of drug pricing is that a price should align with the value a drug provides — the benefit to patients and to health-care systems.

Many countries determine whether a drug is worth its price by subjecting it to a process of evaluation (Health-Technology-Assessment) to determine whether benefits are proportional. Determining if a price is appropriate for a new brand-name drug involves three fundamental questions: is the drug worth it, is it affordable, and is the price fair?

For example, one of the first CAR-T therapies approved to treat cancer, tisagenlecleucel (Kymriah), was developed in a collaboration between Novartis and the University of Pennsylvania, which received more than $200 million in taxpayer funds for the research. Given the substantial public investment, is the launch price of $475,000 fair?

In the United States, things are done differently. Americans tend to assume that market-forces will lead to prices that reflect willingness-to-pay, or the value of a good to someone. But drugs are different from most consumer goods. The elasticities of supply and demand don't necessarily apply. And new drugs are invariably protected by numerous patents, which give the manufacturers market exclusivity. Manufacturers have few constraints in the U.S. on how high they can set prices.

This article via Scientific America poses a spotlight on the ethics of pricing prescription drugs. High drug prices have created ethical dilemmas — especially in a pandemic, when America's vast inequities in health care have taken on a new urgency.