“In the jargon of economics, the demand for therapeutic drugs is ‘price inelastic’: increasing the price doesn’t reduce how much the drugs are used. Prices are set and raised according to what the market will bear, and the parties who actually pay the drug companies will meet whatever price is charged for an effective drug to which there is no alternative. And so in determining the price for a drug, companies ask themselves questions that have next to nothing to do with the drugs’ costs. ‘It is not a science,’ the veteran drug maker and former Genzyme CEO Henri Termeer told me. ‘It is a feel.’”

– An examination of how pharmaceutical companies determine the price of drugs. Read more on medicine in the Longreads Archive.

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Photo: Rennett Stowe

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