A patent can run out, leaving competition from generic versions of the drug to lower prices. Alternatively, a patent can be outcompeted by other patents. But competition is a factor when there are several drugs in the same therapeutic class. A second reason why regulating prices might be especially harmful in the pharmaceutical industry is that many products fail to make money. They sell above marginal cost, but they lose money when the cost of development is taken into account.
Many people express concern over the high prices of blockbuster drugs.
Blockbusters are covering for the three-fourths of drugs that are losers. Holding down profits on the blockbusters will also take away funding that goes for the losers. The purchase price of a drug already on the market is not of primary importance. What is more important is the real price of health care. If there is no product to treat a particular condition today, treatment is infinitely expensive.