No correlation between high drug prices and r&d---best studies.

To our knowledge, this study was the first to quantitatively explore whether research and development investments were associated with drug prices in the US. Research and development investments for the 60 new drugs examined did not explain variation in list prices, providing little support for arguments by pharmaceutical manufacturers that high drug prices are justified by high research and development costs. Although this empirical evaluation was limited by the number of drugs with available data, the findings were robust to the choice of covariates and the years of the price data (launch vs 2021). A small inverse association between research and development investments and treatment costs from 2021 was observed when generalized linear models were fitted, but this association disappeared in the parsimonious model in which correlated covariates were excluded. No association was found between research and development investments and treatment costs that were estimated using net prices for the subset of products for which net pricing data were available.

The lack of association between research and development investments and list prices of drugs was not unexpected, given that pharmaceutical firms aim to maximize profits based on consumers' willingness to pay. This study offers empirical evidence that, in the US, drug companies charge what the market will bear. The lack of association between research and development investments and list prices of drugs is, however, of major policy relevance because drug companies and their trade associations often claim that high drug prices are needed to recover research and development investments. If research and development costs justified drug prices, an association between the 2 variables would be found.