Drug company Nostrum Pharmaceuticals has recently hiked the price of a 65-year-old antibiotic mixture by 400 percent to $2,000 a bottle. Nostrum's wasn't the only price increase last month; it was one of 60, according to Wells Fargo.
From China to the United States, drug price hikes of essential medicines are coming under political scrutiny. In the absence of a world body deciding on the fair pricing of medicine, drugmakers can boost prices so they and middlemen can make bigger profits.
"Each country has its own healthcare system, its own healthcare budget, and by extension its own system of charging or deciding on what a new treatment should be priced at and what is a fair level," explains Gustav Ando, senior director and vice president within the Life Sciences Group at IHS Markit.
"In many countries, it's a very heavily regulated market and it's difficult to charge excessive prices. But in other markets, you have a different system and they let a free market decide what a fair price is; and in which case, there are multiple layers of actors who decide on the price - starting with the pharmaceutical company itself proposing a price, then having payers' insurance companies and other bodies that then weigh in to decide whether this is actually a fair price. Then, there could be a negotiation based on that."
Digitalisation changes "almost everything with healthcare", according to Ando. "It means that you're able to conduct potentially more efficient clinical trials, you're able to more easily identify potential molecules that you can target and mechanisms of action that you can target all the way through the actual delivery mechanism of a treatment ... the level of innovation is also factored into the price of a drug," says Ando.
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