Brand Name Prescription Cost - More Than Meets the Eye

Stephanie Health Guide
  • There are often posts and questions about the costs of name brand prescriptions. Often these questions imply a level of greediness on the drug manufacturer’s part. While there are probably greedy drug manufacturers, I’m sure there’s a lot more that goes into it than that.


    In a 2001 article, Lipsky and Sharp further explain the process and why it costs so much and takes so long. Getting a drug to market is a very long process that generally takes 8-12 years and in 2001 was estimated to cost $500 million for just one medication. For every 5,000 to 10,000 drugs that start down the process only one will make it to market! There is a good reason this process takes so long. In fact, in the early 1900s there was no approval process and anyone could sell anything to anyone. It doesn’t take much to imagine what the issues were with this. Slowly over the 1900s more and more process came to be in order to protect people from harmful medications.

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    1)      Pre-clinical – takes 2-3 years on average. This is the phase where the drug is first being developed and tested for safety on animals.

    2)      Phase 1 – During this phase the safety of the drug is tested on 20-100 healthy volunteers. This phase takes 1-2 years.

    3)      Phase 2 – Effectiveness is studied on 100-300 patients with the condition. This phase generally takes 2 years.

    4)      Phase 3 – Results in phase 2 are confirmed on more patients. This phase can take 2-10 years.

    5)      FDA approval application – one year to get through approval if everything looks good.

    6)      New Drug Approval – Marketing and post-marketing monitoring starts. The problem is that while the above process is rigorous there is unfortunately no way for them to test every different situation. So, realistically when a new drug comes out and everyone jumps on it – they are volunteering to be part of the post-marketing studies.


    The drug is patented which means that no one can make copycats for 20 years, but the clock starts ticking before phase 1 starts so the patent may not have a lot of time on it by the time the drug comes out.


    So, in summary – the brand name medications need to be expensive because there’s a lot of money that goes into developing them. The money that is made on a successful drug is then used to develop new drugs. Once the patent runs out the money dries up pretty quickly. We all need drug manufacturers to want to continue in order to keep new medications being developed. While I’m not always happy about my medication costs, understanding why helps me feel at least a little better about it!



    Lipsky, M. &. (2001). From Idea to Market: The Drug Approval Process. American Board of Family Practice , 362-367.

Published On: December 06, 2010