Factors influencing the price of medicines

Factors that have a real impact on medicines pricing can be grouped into three categories: medical, economic, and political and environmental. Within the group of medical factors, one can distinguish patent protection, the cost of drug production, and the value of the medicines. Economic factors, taking into account the aspect of market competition among companies, include: the size of the producer, the nature of the company (whether it is a research unit or a pharmaceutical company), return on investment, and the profitability of the entity. The remaining groups of factors (environmental and political) mainly refer to national legal regulations. They are related, among others, to the registration system for marketing authorization or the reimbursement system, which determines whether and how drugs are financed from public funds.

The cost of drug production itself is therefore not the only, but a very important factor determining the final price of the product and thus its availability to patients worldwide. The costs of current production mainly include the prices of raw materials and active substances, the costs of utilities and energy, machinery and analytical reagents, and labor costs. Fluctuations in currency exchange rates must also be taken into account.

Duration of the drug discovery and development process

In the complex world of pharmaceuticals, drug development is a multi-phase process that requires time and precision. From the moment of discovering a new active substance to the introduction of the finished product to the market, it can take up to a dozen years, and each phase of development – discovery, preclinical studies, clinical trials, and drug registration – involves high costs.

In the drug discovery phase, scientists must test thousands of chemical compounds to find those with potential therapeutic effects. After discovery, potential drugs enter the preclinical phase. This includes laboratory tests and animal studies to assess safety and efficacy. Scientists analyze the behavior of the compound in the biological system, its toxicity level, and appropriate dosage. This phase lasts 1-2 years.

Candidates then proceed to clinical trials, which are divided into four phases:

Phase I: Focuses on the safety profile of the drug in a small group of healthy volunteers.

Phase II: Expands to a larger group of patients to assess efficacy and further evaluate safety.

Phase III: Involves thousands of participants, providing complete data on efficacy and monitoring adverse reactions.

Phase IV: After the medicinal product is authorized for marketing. This stage is to determine whether the drug is safe in all indications recommended by the manufacturer and for all groups of patients. The results obtained in the previous stages are also verified.

The clinical trial stage is often the longest and most resource-intensive part of the drug development process. It should also be taken into account that generic products do not have such a complex and costly clinical trial process, but most often it is limited to a bioequivalence study. It confirms in humans that the drug is absorbed in the same amount at the same time as the original product.

The longer and more complex the research, the higher the costs

Medicinal products can only be marketed if the competent authority issues a relevant decision on marketing authorization. Before issuing such a decision, the competent authority confirms whether the medicinal product is of appropriate quality, whether it is safe and effective. The assessment is based on the application submitted by the responsible entity and the documentation attached to it.

Regulations

Regulations regarding drug production are necessary to ensure adequate quality, efficacy, and safety. However, it is worth remembering that they constitute a significant factor influencing the cost of drug production. The European Union has coherent pharmaceutical law, but each member state has its own regulations governing the pharmaceutical market, and drug manufacturers must meet specific requirements for their products to be placed on the market.

Regulatory requirements for drug production include not only procedures related to clinical trials and registration but also standards for production, testing, storage, and distribution. An example is GMP standards, which define the principles of good manufacturing practice. Meeting these requirements is necessary to obtain a manufacturing authorization, but it involves additional costs that must be included in the final price of the drug.

Modern technologies

Modern technologies play a key role in drug production because they directly affect the way production processes are carried out and improve the quality of finished products. However, the use of such solutions involves additional costs, which also affect the final cost of drug production. One such example is nanotechnology, which allows for the creation of drugs with increased bioavailability.

It is also worth mentioning the use of IT technologies in drug production. IT systems automate and monitor production processes, which on the one hand increases efficiency, but on the other hand generates additional costs related to the implementation and maintenance of these systems.

Patent costs

Patents are another important element influencing the cost of drug production. Obtaining a patent for a new drug is not only time-consuming but also expensive. Patent protection provides pharmaceutical companies with exclusivity to sell a new drug for a specified period, but the costs associated with obtaining and maintaining the patent, as well as potential litigation, can significantly affect the final production cost.

Drug development and production on request – a cost-effective solution

The duration of the drug discovery and development process, regulations, the use of technology, patent issues, and research are just some of the elements that should be considered when analyzing drug production costs. That is why contract drug manufacturing is so popular. The cost and comfort resulting from such a service are, for many responsible entities, brand operators, a much more advantageous solution than investing in their own infrastructure. Contract drug manufacturing is, above all, an effective way to optimize costs and minimize business risk.