Huh? Those two things certainly do represent real costs.
If a company spends $2B to develop 5 candidate drugs and four fail, the cost was $2B for that drug. Learning what doesn’t work helps you find something that does.
Second, opportunity costs are real costs, even though most consumers ignore them. You see this when buying a home. People never count the money they could have made by putting their down payment into the market, but that’s still money lost. You can argue 11% is too high, but that’s a different argument.
The conventional perspective seems misleading, then. Saying you can bring a drug to market for a price that doesn't include the costs of failure in finding out how to make the drug in the first place completely distorts the matter, IMO.
Maybe I'm not getting what you think the benefits of not counting research costs across the board are.
Pharmaceutical development is really just throwing mud at a wall and seeing what sticks.
Sometimes, something sticks and you get rich, sometimes it doesn't and you get nothing.
If during one of those failed attempts you came across something useful but not lucrative, I think the cost of bringing it to market should start at that point, and should not include all the trials when you were looking for the cash cow that you had to do anyway. shrug
If a company spends $2B to develop 5 candidate drugs and four fail, the cost was $2B for that drug. Learning what doesn’t work helps you find something that does.
Second, opportunity costs are real costs, even though most consumers ignore them. You see this when buying a home. People never count the money they could have made by putting their down payment into the market, but that’s still money lost. You can argue 11% is too high, but that’s a different argument.