Common questions

Frequently asked questions about pharmaceutical research

Q. What is the government's role in developing new medicines?

A. Both the National Institutes of Health (NIH)—the US government's primary research arm—and the pharmaceutical industry work to advance scientific knowledge and understanding of disease. However, most of the government's work is concentrated on early research activities that do not lead to specific medicines. For example, of 47 top-selling US medicines examined in an NIH study, only four had been developed in part with technologies created by NIH funding. All the rest were discovered and developed—and funded—by pharmaceutical companies.

Q. What diseases are currently being researched for treatment with potential medicines?

A. This is an exciting time for prescription medicine research and development! US pharmaceutical companies have more than 1000 new medicines in development. Many are aimed at treating:

  • Various forms of cancer
  • Diseases often associated with aging, like arthritis, diabetes, and depression
  • Neurological disorders, including Alzheimer's, Lou Gehrig's disease, multiple sclerosis, and Parkinson's disease
  • And the leading killers of Americans: heart disease and stroke
Q. What is the US Food and Drug Administration's role in the discovery and development of new medicines?

A. The Food and Drug Administration (FDA) is responsible for deciding whether a newly developed prescription medicine is safe and effective for patients to use—this is commonly referred to as "FDA approval."

The FDA must give its approval before a pharmaceutical company can begin testing a new medicine; the agency then monitors the company's rigorous clinical trials. FDA approval comes only after long and careful review of the scientific and clinical trial data submitted by the pharmaceutical company developing the medicine. The FDA has taken less time to consider a new medicine for approval in recent years. However, requirements of lengthier and larger clinical trials have increased the total time it takes to bring a new medicine to market. The FDA continues to monitor medicines once they are on the market.

Q. How long does it usually take for a new prescription medicine to become available for patients?

A. On average, it takes 12 to 15 years for a potentially effective and safe medicine to go from the laboratory to the pharmacy. This means that a medicine discovered when a child starts first grade will probably not be on the market until she graduates from high school! All the while, the company developing the medicine is spending millions of dollars on its development.

This may seem like a long period of time. However, everyone benefits from the efforts made to ensure that new medicines are both safe and effective before they are made available for patients to use.

Q. How much does it cost to develop a new prescription medicine?

A. It costs about $800 million to research and develop a single new medicine. But did you know that only one out of a million potential new medicines screened by scientists at such high cost will ever make it to the pharmacist's shelf? Along the way, many questions must be answered, such as:

  • Is the potential medicine safe for patients?
  • Can it be created in a form patients can use—such as a pill, inhaler, or injection?
  • What is the proper dosage for different patients?
  • Is it effective for patients with the condition it would treat?
  • Even after FDA approval for your doctor to prescribe, not all new medicines are profitable. In fact, only three out of ten medicines that reach the marketplace ever make enough profit to cover average research and development costs.
Q. Why do prescription medicines seem so expensive?

A. Often, prescription medicines seem expensive because they are not covered by insurance. Prescription medicines account for only about ten cents of every dollar spent on healthcare in the US, but a lot of that is paid by patients. In comparison, patients must pay only a small percent of other healthcare costs, such as doctor visits and hospital stays, because insurance covers these costs.

Prescription medicines keep people well and decrease their need for more expensive health services such as hospitalization and nursing home care. Medicines help people stay on the job and at home with their families.

Q. How do the pharmaceutical companies determine prices for their medicines?

A. The industry prices medicines according to their value.

The value of a medicine is determined by:

  • Whether there are other treatments available
  • Whether the new medicine offers a significant advantage compared to existing treatments
  • Its total research and development costs
  • The costs of continuing reinvestment in new medicine research and development

It is also important to understand that what a patient pays for a medicine includes more than what it cost to develop and manufacture. Wholesalers and retail pharmacies add their own mark-ups, which can vary widely: The same medicine can sell for very different prices from store to store—with the price varying by as much as 50-75%. Shopping around for the best price can mean significant savings.

Q. Why doesn't the US government set the price of medicines the way some governments have done in other countries?

A. In the US, the healthcare system operates in an open and competitive environment where quality care, choice, and the best medicines are priorities. We also rely on market forces, such as competition, to control costs. As a result, the US pharmaceutical industry is the most innovative and productive in the world, and patients in the US have the best access to the best medicines.

Some countries have price controls, meaning the government keeps medicine prices artificially low. But the people pay another kind of price: limitations on access to new medicines and critical health services. For example, Canadians must wait nearly three months for elective cardiovascular surgery—more than twice as long as the medical community recommends.

Q. Why are the same medicines priced differently in other countries?

A. Besides the issue of price controls (see above question), you should be aware that prices of all kinds of goods, from hamburgers to medicines, vary from country to country. The same goods and services can cost
20-30% more in the US than in Canada, Germany, or France.

Part of these price differences relates to the wages average workers earn in different countries. Americans are among the highest paid workers in the world. Thus, even though prices may be higher here, the working time Americans require to buy many products, including prescription medicines, is less.

Q. If medicines reduce the cost of treatment, then why are pharmaceutical costs rising faster than other healthcare costs?

A. Media reports often confuse the rise in "drug spending" with rises in drug prices. But in fact, it's important to understand that spending on medicines is increasing mainly because more people are relying on medicines for good health, not because prices are increasing.

What's more, even though Americans are spending more on healthcare, spending on prescription medicines as a percent of total national health expenditures has remained at or below 10% for 40 years. In comparison, hospital costs and physician services not only generated more of the overall increase in spending, but they also account for much larger portions of total US healthcare spending.

Keep in mind, too, that medications often lower overall treatment costs. For example, a government study showed that greater use of a
blood-thinning medicine could prevent nearly 40,000 strokes a year, saving more than 10,000 lives—and $600 million in healthcare costs.

Q. Why are there generic versions of some medicines but not others?

A. The company that discovers a new prescription medicine obtains a patent for that medicine. US patents are good for 20 years. The patent allows the company to be the exclusive provider of the medicine during the patent's life.

But patents on new medicines are obtained early in the discovery and development process—many years before a medicine comes to market, if it ever does.

Because of the extensive development time, the manufacturer has only about 11-12 years of patent life left once a brand-name medicine is on the market. This exclusive time on the market allows the company to earn back research and development costs, make a profit, and generate sales to fund research. Until a brand-name medicine's patent expires, generic medicines—which are copies of brand-name medicines—are not allowed on the market.

It is important to note that a new medicine's patent protection doesn't mean there's no competition. New patented medicines must compete against other new medicines under patent as well as against older medicines that may treat the same disease—which may include generics.

Q. What's the difference between generic medicines and brand-name medicines?

A. Generic medicines are not exact copies of brand-name medicines. What the FDA does require is that the active ingredient(s) in the generic medicine be the same, and be present within a specific range, as in the brand-name medicine. A generic medicine must be shown to be "bioequivalent" to the brand-name medicine before it can be marketed in the US.

"Bioequivalence" means that the medicine's active ingredient(s) must be absorbed into the body in essentially the same amount and at the same rate as the brand-name product.

Q. Why are generic medicines less expensive?

A. It takes many years and hundreds of millions of dollars to develop a new medicine, but it takes relatively little time and money to copy one. Makers of generic medicines do not have to invest the substantial resources necessary to develop a medicine from scratch, or generate revenue to support new research—so they can afford to charge much lower prices.

You should be aware, however, that some pharmacies have steep
mark-ups on generic medications, so it pays to shop around for the best price.

Q. What programs are available for low-income people who cannot afford prescription medicines?

A. The newest of these programs is the Together Rx AccessTM prescription savings card, designed to provide at-the-pharmacy savings of 25 to 40% or more off the customary pharmacy price for millions of Americans under age 65 who qualify.

GlaxoSmithKline and nine other leading pharmaceutical companies have teamed up to provide their individual savings programs through the free, easy-to-use Together Rx AccessTM prescription savings card. The Together Rx AccessTM card is good for some 36 million Americans under age 65 who qualify without public or private prescription medicine coverage. The card covers more than 275 brand-name prescription medicines as well as a wide range of generics, and savings are calculated right at the pharmacy counter.

The Partnership for Prescription Assistance (PPA) can help many uninsured people get the drugs they need free, nearly free, or at significant savings for those who qualify. With just "one stop," PPA puts them in touch with public or private savings programs that often match their needs. PPA offers information and assistance for accessing more than 1200 drugs.

Through a toll-free number—1-888-4PPA-NOW (1-888-477-2669)—and a user-friendly website, www.pparx.org, the Partnership for Prescription Assistance offers quick contact with hundreds of prescription help programs. (Drug companies offer more than 150 of them.) If you call or go online to contact PPA, you should have a list of drugs you are taking handy.

Q. Why are there so many direct-to-consumer (DTC) ads for prescription medicines?

A. DTC advertising reaches the millions of Americans who may not realize they have a serious health condition or know that treatment is available. DTC ads also encourage patients to communicate with their healthcare providers.

And DTC ads work. A recent Prevention magazine study found that 25 million people asked their doctor about a health condition for the first time because of these kinds of ads.

Q. Do pharmaceutical companies spend more on direct-to-consumer (DTC) advertising than on research and development?

A. Although some reports claim that pharmaceutical companies spend more on advertising than on research, the truth is that the industry invests much more every year on the search for new medicines than on promoting ones already on the market.

Q. Why do companies spend so much on promoting products to healthcare providers?

A. Pharmaceutical companies need to educate physicians and other healthcare professionals about the benefits, as well as the risks, of their prescription medicine products—particularly new products. Company promotions to healthcare professionals provide this vitally important information to physicians and other healthcare professionals and also help ensure that their individual questions are answered.