Everyone knows that Americans pay high prices for drugs. But there is more to this story. The taxpayer not only shells out at the pharmacy but often plays a critical role in funding these drugs in the first place. In other words, the public pays twice.
Although the pharmaceutical industry justifies routine overcharging by pointing to the huge, and uncertain, costs of research, the truth is that the government historically took, and continues to take, the greatest risks.
Since the 1930s, the National Institutes of Health has invested close to $900 billion in the basic and applied research that formed both the pharmaceutical and biotechnology sectors, with private companies only getting seriously into the biotech game in the 1980s.
Big Pharma, while of course contributing to innovation, has increasingly decommitted itself from the high-risk side of research and development, often letting small biotech companies and the NIH do most of the hard work. Indeed, roughly 75% of so-called new molecular entities with priority rating (the most innovative drugs) trace their existence to NIH funding, while companies spend more on "me too" drugs (slight variations of existing ones.)
But if Big Pharma is not committed to research, what is it doing? First, it is well known that
Big Pharma spends more on marketing than on R&D. Less well known is how much it also spends on making its shareholders rich. Pharmaceutical companies, which have become increasingly "financialized," distribute profits to shareholders through dividends and share buybacks designed to boost stock prices and executive pay.
https://www.latimes.com/opinion/op-ed/la-oe-1027-mazzucato-big-pharma-prices-20151027-story.html