Debate On Cheaper Drugs Rages Amid High Cost of Healthcare

Posted: 2:45 AM | Feb. 15, 2006

Daxim L. Lucas
Inquirer

"THE common assertion is that prescription drugs are costly because drug companies need to recover the high costs of research and development (R&D) that went into their development."

"The industry has used a figure of $800 million as the average cost of bringing a pharmaceutical compound through screening, chemistry, pre-clinical development and clinical testing."

"It's a fallacy to suggest that [the pharmaceutical industry], or any industry, prices a product to recapture the R&D budget spent in development. Business doesn't work like that. Those are sunk costs. In other words, [pharmaceutical firms] spent the money and it cannot be recovered no matter what [they] decide to do with pricing."

Those may sound like the comments of an activist raving against the "oppressive" pricing practices of an "abusive" pharmaceutical industry.

They are words of Pfizer Inc. chairman and CEO Hank McKinnell -- a leading light in the global pharmaceutical industry -- in his book "A Call to Action: Taking Back Healthcare for Future Generations" published only in May 2005.