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Are High Prices for Pharmaceutical Drugs Fair?

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Pharmaceutical companies are unfair in charging prices that so far exceed the costs of the chemicals in their products, especially in lifesaving drugs.

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Solution Summary

This solution discusses how the pharmaceutical business model relies on high contribution margin from drugs to recoup research and development costs in 275 words.

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There are other factors to be considered here. Consider how long it takes to develop a drug: all the trials, testing, labwork. All that goes into a drug costs money, not just the chemicals. Also consider how long it takes for a drug to be approved. The FDA can take up to 20 years to approve one drug. In that time, a drug company is losing valuable revenue.

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