Big Pharma Pays to Keep You Healthy

While a ~$175 Lipitor prescription appears to be expensive, the price seems more reasonable when you consider Pfizer spent over $1 billion in developing the cholesterol-reducing medication. Today, Lipitor sales (not taking generic Atorvastatin into consideration) are upwards of $125 billion since the FDA approved the drug in 1996. Put modestly, Lipitor was successful, but most drugs don’t have the same success because they are never approved for sale to the public. This article by Matthew Herper of Forbes discusses the challenges and staggering costs pharmaceutical companies face when developing new drugs.

http://www.forbes.com/sites/matthewherper/2013/08/11/how-the-staggering-cost-of-inventing-new-drugs-is-shaping-the-future-of-medicine/

On a purely financial note: I personally recommend investing in an orphan drug company such as Alexion. The Orphan Drug Act allows for faster FDA approval of drugs used to treat rare, serious diseases. Since orphan drugs receive expedited approval, they avoid certain loopholes that would tack on extra costs. Additionally, since the drug is for rare and serious diseases, it can be marked up to a price of hundreds of thousands of dollars per patient. With low costs and high prices, orphan drug companies run incredibly lucrative businesses, and will undoubtedly continue to as other drug companies spend millions or billions of dollars and waiting as much as two decades for FDA approval of their product.

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