Question

How do patents and the role of insurance affect drug prices?

Answer 1

Patents are a sure shot way for companies to earn as much profit as possible on drugs. Companies have to get regulatory approval which entails a huge cost, in addition the research for a new product takes years of work and historical knowledge to get a particular result. Patents are given for a limited time frame which entices the company to maximize as much profits as possible.

Health insurance companies try to cover affordable drug prices to make the premiums affordable to the customers. The drug prices are reduced as much as possible to maximize company profits. Thus they try to bring about a reduction in drug prices and keep the expensive ones out of their ambit. The costs are showed to the customer to be as low as possible, however it is also the case that companies hike up the prices and then give discounts so that the customer believes they are getting favourable treatment.