This is probably the most egregious example of price gouging in the pharma industry. But it is an outlier and not representative of the whole industry I feel l

This is probably the most egregious example of price gouging in the pharma industry. But it is an outlier and not representative of the whole industry I feel like there are ~3 groups of high priced drugs: - straight up profiteering: this is the questcor playbook, that also inspired martin shkreli. companies find cheap old drugs that treat severe rare disease where they can get away with jacking up the price. The companies do no original r&d or new science. This is a rare practice these days and is highly stigmatized in the industry, as this type of practice kicked off a lot of the political debate around drug pricing - increasing price of "legacy" drugs: big pharma is increasingly bad at r&d. The industry is also in a period where a lot of huge drugs are going off patent. So pharma companies increasingly rely on price increases of mature drugs, rather than development of new drugs, to sustain revenue growth. This is a much bigger phenomenon in dollar terms than the aforementioned profiteering. This is possible mostly for large molecule drugs because the "generic" pathway isn't as mature as small molecules, so the large molecule drugs can have exclusivity after patent expiry. Huge multi billion dollar drugs like humira and enbrel have done this a lot. Private payers are beginning to push back on this pretty effectively, and hopefully as the biosimilars industry matures this will improve. - innovative, clinically valuable medicines. Some medicines are expensive because they are worth it in health economic terms. The cost per QALY gain is within the "acceptable" range. Most of the industry really does try to develop drugs like these (with varying degrees of conviction), but it's really hard. Companies ideally only want to develop drugs that are first in class or best in class. When that fails (which it usually does) they resort to aforementioned strategies. Unfortunately in many cases these innovative drugs are priced too high. They are often developed by startups and then bought by big pharma once the tech is derisked. Pharma is under huge pressure to grow revenue so they often price these meds too high. Which is a shame bc a lot are amazingly good medicines Price isn't the only issue though, access is another, although they go hand in hand. Price can be "fair" but access still limited by payers. Copays for drugs are generally higher than for medical procedures, so consumers feel like drug prices are higher than medical procedures, when in reality they are all super high