Developing new drugs is a high-stakes gamble. National Institutes of Health data shows that more than 95% of drugs fail during development, and only about 12% of new drug applications earn Food and Drug Administration approval. Drug development is complex, expensive and competitive. The public remains concerned about the rising cost of drugs. While many Americans blame pharmaceutical companies for drug prices, more attention should be focused on the high-stakes nature of innovation as the driver of high drug costs.
Drug development takes decades. The average time from discovery to FDA approval is about 14 years. For example, Vertex Pharmaceuticals Inc. spent more than 20 years and billions of dollars developing therapies to treat the underlying cause of cystic fibrosis, a disease once thought untreatable. Their medicines now help more than 75,000 patients, over two-thirds of those eligible. Despite skyrocketing research and development spending, new drug approvals remain relatively flat. Today, developing a single novel drug can cost up to $2.8 billion. These findings reveal a simple truth: The price of successful drugs must offset the losses from the many that fail. Most potential drugs never reach the market, and every successful drug carries the weight of hundreds of failed experiments. Lowering drug prices without accounting for this risk could weaken incentives to invest in research and development, slowing the pipeline of future treatments for patients.
Even when drugs succeed, financial risk remains. Patent protections, designed to reward innovation, last a limited time. Once they expire, lower-cost generics enter the market, often cutting revenues by up to 79%. Analysts estimate that over $200 billion in annual pharmaceutical revenue is at risk by 2030 due to expiring patents. Today’s blockbuster drug can become a financial liability tomorrow once its patent expires. For example, Merck’s type 2 diabetes drug Januvia will face a rapid revenue decline when 25 generic manufacturers enter the market in May.
High drug prices in the U.S. are concerning, but context matters. Costs fund future lifesaving drugs and absorb failures – they are not simply corporate greed.
Policymakers should pursue solutions that reward innovation while improving patient access. Strengthening NIH funding for high-risk, high-reward research can reduce the financial burden on companies while encouraging breakthrough therapies. Accelerated FDA pathways, such as the “Breakthrough Therapy” designation, can also bring drugs to patients faster without compromising safety.
At the same time, policies can lower drug costs without undermining innovation. Price negotiations under the Inflation Reduction Act can reduce prices for high-cost drugs while maintaining incentives for early-stage development. Tax credits or subsidies for rare or underfunded diseases, similar to proposals under “TrumpRx,” could also balance affordability with continued investment in innovation.
High drug prices reflect the courage to invest billions of dollars in the search for new cures. Today’s investments make tomorrow’s cures possible. Organizations such as MassBio advocate for policies that safeguard patient access while fostering a thriving life-sciences sector in Massachusetts. Policymakers should advance legislation that keeps treatments affordable while preserving the incentives that drive pharmaceutical innovation and deliver future cures.
Sydney Draper is a junior at Providence College, majoring in health policy and management, and economics. She lives in Boxford, Mass.
