The way we pay for prescription drugs is more complex than the way we pay for anything else in the health system. And at some level, that makes sense.
When we pay for innovative medications (those with patents or FDA-granted market exclusivity), we're not paying just for the pill – we're paying a high price to incentivize the 10 years of clinical research needed to get that drug through the FDA approval process, and all the failures along the way. This high price is often negotiated down by various middlemen, but it nevertheless remains a “monopoly price.” Patents, along with FDA-granted market exclusivity, preclude competitors from marketing the same drug under the same or different name for a period of time.
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