"We can find no convincing evidence to support the view that the lower prices in affluent countries outside the United States do not pay for research and development costs. The latest report from the UK Pharmaceutical Price Regulation Scheme documents that drug companies in the United Kingdom invest proportionately more of their revenues from domestic sales in research and development than do companies in the US. Prices in the UK are much lower than those in the US yet profits remain robust. Companies in other countries also fully recover their research and development costs, maintain high profits, and sell drugs at substantially lower prices than in the US. For example, in Canada the 35 companies that are members of the brand name industry association report that income from domestic sales is, on average, about 10 times greater than research and development costs. They have profits higher than makers of computer equipment and telecommunications carriers despite prices being about 40% lower than in the US."

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1261198/

"It is widely claimed that research to discover and develop new pharmaceuticals entails high costs and high risks. High research and development (R&D) costs influence many decisions and policy discussions about how to reduce global health disparities, how much companies can afford to discount prices for lower- and middle-income countries, and how to design innovative incentives to advance research on diseases of the poor. High estimated costs also affect strategies for getting new medicines to the world’s poor, such as the advanced market commitment, which built high estimates into its inflated size and prices. This article takes apart the most detailed and authoritative study of R&D costs in order to show how high estimates have been constructed by industry-supported economists, and to show how much lower actual costs may be. Besides serving as an object lesson in the construction of ‘facts’, this analysis provides reason to believe that R&D costs need not be such an insuperable obstacle to the development of better medicines. The deeper problem is that current incentives reward companies to develop mainly new medicines of little advantage and compete for market share at high prices, rather than to develop clinically superior medicines with public funding so that prices could be much lower and risks to companies lower as well."

"The deeper problem is that current incentives reward companies for developing mainly new medicines of little advantage, and then competing for market share at high prices; rather than rewarding development of clinically superior medicines with public funding, so that prices could be much lower. One or two out of every 20 newly approved medicines offer real advances, and over time they have accumulated into a highly beneficial medicine chest for humanity. Approving new medicines using non-inferiority or superiority trials against a placebo, and using substitute or surrogate end points, has resulted for years in about 85 per cent of new drugs being little or no better than existing ones. These then become the medicines the rest of the world wants, because the rich have them and presumably benefit from them. But in fact, they have spawned an epidemic of serious adverse reactions that rank behind stroke as a leading cause of death and cause about 4.4 million avoidable hospitalizations worldwide. Thus the mythic costs of R&D are but one part of a larger, dysfunctional system that supports a wealthy, high-tech industry, gives us mostly new medicines with few or no advantages (and serious adverse reactions that have become a leading cause of hospitalization and death), and then persuades doctors that we need these new medicines. It compromises science in the process, and consumes a growing proportion of our money."

https://link.springer.com/article/10.1057/biosoc.2010.40