Pharmaceuticals overpriced?

I work in pharmaceuticals. Usually the only times pharmaceuticals appear in the news are A when someone says they are overpriced, or the price has been increased dramatically by someone or B when a new miracle future cure has been found for something (which can take years to come to market as will partly be explained below) and C [which is] people die in a country  when a drug or, for example baby milk, is contaminated either on purpose or accidentally by persons unknown for unknown reasons at the time. And D which is regarding animal testing and the conditions under which those animals live. (For clarity, my company has no animals on site and does not use animals on site).

What you think you know about pharmaceuticals may be somewhat different to reality. I can only talk about my own personal experiences, but to help you understand a little better here goes my explanation of things as I see them and have read.

I must emphasize, this is only the basic structure of the processes a medicine must go through. It is an example only. There can be other things a pharmaceutical company must do or comply with that I may have missed. I can only tell you about my experience from the ‘shop floor’ so-to-speak.

In its basic format this is how it works in the real world. A drug or pharmaceutical company researches a particular product for a particular illness/disease/complaint. This product involves long nights, lots of money to finance the research (funded by shareholders/owners/sponsors/profits or other means), permission to trial, clinical trials (which may prove the product to work or not work), submission to required authorities for a license based on trials, license and then (if license granted) retail. That is very basic and there could be other things that need to be done which I may have missed.

Research (R&D)

My company invested millions of pounds to research the product I work on (see footnote). At this point there is no guarantee that any money spent here will be got back. My company invested in re-fabrication of a building, equipment, staff and of course lots of time. This went on for over 2 years for the product I work with. All new medicines are required by law to be tested for safety, quality and effectiveness.  People tend to forget that pharmaceutical companies are businesses and not charities and even at this point could have invested millions or billions on the product research already. This is a very simplified R&D explanation.

Clinical Trials

All medicines must be trialled. This is to ensure the products actually work on live patients and there are no fatal side effects. It also helps the company collate side effects for usage later on (those Patient Information Leaflets (PILs) you get in all medications).

Stages of research

Four stages of clinical trials are used to investigate a new medicine:

  • phase 1 – the medicine is tested in small numbers of healthy volunteers (up to 100 people) to find out how it works in the body and whether side effects increase at higher doses
  • phase 2 – the medicine is tested in moderate numbers of people (several hundred) with a particular condition or disease to see how effective it is and identify common short-term side effects
  • phase 3 – information about the medicine is gathered from a larger number of people (often several thousand) to see how well it works and how safe it is
  • phase 4 – this happens after a licence has been granted, and involves studies to monitor the medicine on an ongoing basis to see if there are any unexpected side effects, or if it causes problems in certain categories of people

License (or Marketing Authorisation)

By law, before a medicine can be prescribed by a doctor it must be given a product licence (or ‘marketing authorisation’) by a regulator. If the product is to be marketed in the UK, then the Medicines and Healthcare Products Regulatory Agency (MHRA) grant a license for that product if it complies with their requirements. The European Medicines Agency (EMA) can grant licenses for products in the EU.

The licence for a medicine includes information such as:

  • what health condition it should be used to treat
  • is it more effective (if others exist)
  • what dose should be used
  • what form it takes – such as a tablet or liquid
  • who can use the medicine – for example, only people above a certain age
  • how long treatment with that medicine should last
  • warnings about known safety issues – such as side effects and interactions with other medicines
  • how the medicine should be stored
  • when the medicine expires

This information is usually included in the summary of product characteristics. This is a leaflet that comes with the medicine to inform healthcare professionals about how it should be used.

As well as a summary of product characteristics, medicines should come with a patient information leaflet (PIL). This leaflet provides patients with certain facts about the medicine.

Also worth bearing in mind at this stage is that there have already been multiple forms to be completed and multiple fees to be paid.

The Final Product

Finally you have a product you can market and make people better with. But now you have to recover some of that money you have invested.
In the UK medicines are paid for by the NHS if they are approved. Otherwise, medicines must be paid for by individuals privately or insurers. If medicines are NHS approved, they become a burden on the taxpayer eventually.
In the US / Australia and some other countries medicines are paid for either privately or through insurers.
In other countries there can be government-funded schemes whereby governments either pay in full or subsidise the cost of the medicine. The other part of the cost is paid privately or again through insurers.

It should also be pointed out that the premises (and or company) where these products are manufactured is subject to inspections on a regular basis by any and all authorities involved in licensing the product in countries where it is sold. In the UK this is the MHRA (Medicines and Healthcare Products Regulatory Agency) and in the USA this is the FDA (Food & Drug Administration)


All of this costs real money. Real money, real staff, real time. At the starting point there is no guarantee that there will be payback. And indeed, for some researched medicines there is no payback. The product may not be cost-effective to manufacture, may not be effective enough or may just be too difficult to make. So when a pharmaceutical business has a product that makes it to market, it has to do everything within its power to make some profit from that product so it can start the whole process again with a new product.

This is why some medicines are expensive. It’s not down to the cost of the ingredients necessarily, but the need to continue on and needing money to be able to do so.

The other upside, for me personally, is that I get to help fight disease and cancers which makes me humbled and thankful that I can be a part of fighting back. There is no job satisfaction like saving lives. Just ask a paramedic, a surgeon, a fireman or a doctor and the many other people who do such each and every day. Thankyou all.

Footnote: The product I work on is called Xaluprine in the UK and goes by other names in Australia and the US. It is for Acute Lymphoblastic Leukaemia (ALL) in adolescents, adults and children. I work with a small team and we are the only people who make this product for the world.

If you wish to know more about Xaluprine go to Nova Laboratories website.
If you wish to know more about the processes involved in licensing a medical product go to


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