By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works Collective
  • Health
    • Mental Health
    Health
    Healthcare organizations are operating on slimmer profit margins than ever. One report in August showed that they are even lower than the beginning of the…
    Show More
    Top News
    improving patient experience
    6 Ways to Improve Patient Satisfaction Within Hospitals
    December 1, 2021
    degree for healthcare job
    What Are The Health Benefits Of Having A Degree?
    March 9, 2022
    custom software development is changing healthcare
    Digital Customer Journey Mapping and its Importance for Healthcare
    July 21, 2022
    Latest News
    How to Combat Home Sickness After Moving Abroad
    March 19, 2023
    4 Ways to Recover from a Broken Hip
    March 14, 2023
    What Are Dietary Supplements: Purpose, Benefits, & Facts
    March 15, 2023
    5 Benefits of Receiving Acupuncture Regularly
    March 9, 2023
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
    Policy and Law
    Get the latest updates about Insurance policies and Laws in the Healthcare industry for different geographical locations.
    Show More
    Top News
    nursing education online
    What Are Some Great Classes Nurses Can Take Online?
    September 16, 2021
    Down, Down, Down: Avoidable Errors, Uninsurance, Cost Inflation
    December 9, 2014
    5 Effective Ways to Market Healthcare to Millennials
    February 5, 2021
    Latest News
    3 Ways to Improve the U.S. Healthcare System By 2030
    March 14, 2023
    6 Steps To Ensure Speed And Efficiency Of Clinical Studies
    March 14, 2023
    5 Most Valuable Healthcare Programs in 2023
    March 8, 2023
    The Everest Foundation’s Mission to Support Inclusive Healthcare
    February 24, 2023
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: Is Digital Health the Key to Bringing Control to Drug Costs?
Share
Sign In
Notification Show More
Latest News
mental health tips
Caring for Your Mental Health Should Be a Top Priority
Mental Health
combat home sickness
How to Combat Home Sickness After Moving Abroad
Health News
depression signs
Early Signs of Depression that You Shouldn’t Ignore
Mental Health
positive mental health
How to Build a Positive Mental Health Environment
Mental Health
broken hip recovery
4 Ways to Recover from a Broken Hip
Health
Aa
Health Works CollectiveHealth Works Collective
Aa
Search
Have an existing account? Sign In
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Business > Finance > Is Digital Health the Key to Bringing Control to Drug Costs?
FinancePublic Health

Is Digital Health the Key to Bringing Control to Drug Costs?

Kenneth Walz
Last updated: 2013/10/03 at 8:00 AM
Kenneth Walz
Share
4 Min Read
controlling drug costs
SHARE

controlling drug costsA recent article in Forbes by Matthew Herper points to one of the most significant opportunities for innovation in medicine – drug development costs.

controlling drug costsA recent article in Forbes by Matthew Herper points to one of the most significant opportunities for innovation in medicine – drug development costs. Herper estimated that a single drug can cost $5 billion to discover and develop – five times the conventional wisdom, which has long settled on $1 billion as the average cost to create a new drug.

The fact that drug development is expensive is, of course, well known, and is why there is no easy solution to the problem of high – sometimes astronomical – prescription drug prices. When looking at total healthcare costs, it is worth noting that there are many drivers in addition to drug costs. Vlogger John Green, in a widely circulated video last week, argues that every input in healthcare is too expensive. And, according to Susan Desmond-Hellmann, chancellor of UCSF, these cost increases are “not sustainable.” But certainly, prescription drug costs are a significant part of the problem. Separate from these arguments, pharmaceutical companies are often criticized for new treatments that are extraordinarily expensive (the CF drug Kalydeco at a cost of $294,000 per year is a recent example) and for the fact that many charge higher prices in the U.S. than they do in other countries.

I look at the issue of drug development costs as a straightforward return-on-investment (ROI) challenge, where the investment is the aggregate cost of all of the activities undertaken to discover and develop the drug and to get that drug through the steps in the regulatory approval process. Pharmaceutical companies must set prices that, on a risk-adjusted present value basis, provide the return required by their investors who provide the capital to finance the development. Failure to deliver that return will ultimately increase the cost of capital, leading to even higher prices. Worse still, the amount of capital available to pharma may decrease resulting in fewer development programs and ultimately fewer new drugs.

More Read

Tax

What is Medicare Tax and How Does it Work?

5 Compelling Reasons to See a Functional Medicine Doctor
Examining Whether Socialized Medicine Will Ever Happen in America
Creating an effective care plan: The ultimate guide
7 Incredibly Important Benefits of Purchasing Health Insurance

The key to reducing drug costs, then, is to reduce failure rates or, failing that, to fail faster, before all those cost inputs add up. It’s far better to identify a drug that will not succeed before that drug enters the costliest phases of the process.

Without a crystal ball, how can drug companies reduce the cost of development as it relates to failure/success rates?

The introduction of the sequenced genome suggested that this new innovation and the resulting data generated would provide a treasure of knowledge of how diseases worked, resulting in less costly ways to create drugs. To an extent the discovery and development process has become more efficient, but the reality clearly isn’t playing out as fast as the vision.

Assuming the pharmaceutical industry will not experience any revolutionary changes in the way it’s financed, as an industry its cost of capital will remain relatively constant. As long as drug development costs remain at their current levels, the prices charged for new drugs will have nowhere to go but up. So, where does the answer to high drug prices lie?

It may lie in the tremendous convergence of technologies occurring in the life sciences. Taken together, the effects of sequencing the genome and other life sciences discoveries, and adding digital health, the modern internet, and big data, can yield new approaches, new disciplines, and new technologies being brought to bear on the many problems and challenges faced by drug developers.

(drug costs / shutterstock)

Sign Up For Daily Newsletter

Be keep up! Get the latest breaking news delivered straight to your inbox.
By signing up, you agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.
Kenneth Walz October 3, 2013
Share this Article
Facebook Twitter Copy Link Print
Share
Previous Article biopharmaceuticals The Price, Cost, and Value of Bio-Pharmaceutical Care
Next Article mobile dermatology app Over 200 Mobile Apps For Dermatology – But Can “Dr. Mole” Ever Be Truly Accurate…Or Accountable?

Stay Connected

1.5k Followers Like
4.5k Followers Follow
2.8k Followers Pin
136k Subscribers Subscribe

Latest News

mental health tips
Caring for Your Mental Health Should Be a Top Priority
Mental Health March 19, 2023
combat home sickness
How to Combat Home Sickness After Moving Abroad
Health News March 19, 2023
depression signs
Early Signs of Depression that You Shouldn’t Ignore
Mental Health March 19, 2023
positive mental health
How to Build a Positive Mental Health Environment
Mental Health March 15, 2023

You Might also Like

Health carePublic Health

Do You Need Life Insurance? What Does It Cover?

December 23, 2022

Do I Qualify for Social Security Disability Benefits if I Got Injured on My Way to Work?

August 23, 2022
Right Medicare Supplement Plan
Health carePublic Health

What If You Need Emergency Care and Don’t Have Insurance?

February 15, 2022
Psychiatrists are now working online
Global HealthcareHealth ReformMental HealthPolicy & LawPublic Health

Psychiatrists Now Working Online: How the Mental Healthcare Industry Is Evolving

December 12, 2021
//

We influence million of users and is the most authentic source of information on healthcare business and technology news.

Quick Links

  • About
  • Contact
  • Privacy
Subscribe

Subscribe to our newsletter to get our newest articles instantly!

Follow US

© 2008-2023 HealthWorks Collective. All Rights Reserved.

Removed from reading list

Undo
Welcome Back!

Sign in to your account

Lost your password?