Drug pricing mostly receives large-scale media coverage and the usual popular consensus is that "drugs are overpriced". Be it a developed country or a developing one, everywhere there are concerns about drug pricing. Regulators and manufacturers are struggling to find the right price and often caps are imposed on prices. Prices of any goods/services are significantly determined by the market on the basis of the cost of production and the value that they add for the consumer.
The cost of production and the value that a drug adds are not constant over time, place and person. Cost of production of a bringing a new drug into the market is really high. After the new drug spends some time and with entry of competitors, the cost of production of drug falls considerably, and keeps on falling till the drug is totally replaced by a new and more effective drug. Value that a drug adds varies…
