This is one of those discussions that benefit from some actual data. I took a look at Pfizer's 2015 financial statement (here). Just one company, only three years of data and just browsing over the data. Still, a couple of things jump out:
Gross profit margins are 80%, while R&D cost is only 15%. Over the past 3 years they invested roughly the same amount of cash in research as they did buying back stock. The high drug prices aren't only funding product development, they are also funding the high sales expense and shareholder return. The bombardment of tv commercials to generate demand would seem to support that view.
Regarding pricing in the US vs the rest of the world, companies don't price higher in one location to make up for low prices elsewhere. That's not how pricing works. Businesses price as high as they can everywhere, and they show profit everywhere. They don't offer a product at a loss or inadequate profit. That is to say, the "fully cost loaded " product sold in a European country is profitable, and if the EU found evidence that the pharma company was selling at a loss it would be subject to anti-competition regulations.
The price in the US is higher because the consumers pay it.
Gross profit margins are 80%, while R&D cost is only 15%. Over the past 3 years they invested roughly the same amount of cash in research as they did buying back stock. The high drug prices aren't only funding product development, they are also funding the high sales expense and shareholder return. The bombardment of tv commercials to generate demand would seem to support that view.
Regarding pricing in the US vs the rest of the world, companies don't price higher in one location to make up for low prices elsewhere. That's not how pricing works. Businesses price as high as they can everywhere, and they show profit everywhere. They don't offer a product at a loss or inadequate profit. That is to say, the "fully cost loaded " product sold in a European country is profitable, and if the EU found evidence that the pharma company was selling at a loss it would be subject to anti-competition regulations.
The price in the US is higher because the consumers pay it.